Selling a property in need of renovation

If you own a property that is in need of work, whether that be cosmetic or structural, it’s likely that the thought of selling has crossed your mind. Many property owners in this position experience an initial worry about if and how their renovation properties will sell. In truth, however, these properties are often sought after by buyers looking for their dream home to live in and put their own stamp on, as well as investors who want to flip the property for a profit or complete the work and rent it out.

With that being said, properties that require this kind of work present unique challenges for selling for a number of reasons such as being unmortgageable, incorrectly priced, and facing marketing difficulties. In this guide, we’ll take you through these common pitfalls so that you can avoid making these mistakes if you’re looking to sell, and offer our top tips for securing a fair offer.

Is it legal to sell a property that needs work?

There is a question that many property owners ask themselves, and that is ‘do I need to make the repairs before I sell?’, and the answer is no, you do not need to make repairs before you sell. It is perfectly legal to sell a property that needs a lot of work via any method of sale, however, it should be noted that if a building is deemed ‘unmortgageable’ you will have a smaller pool of buyers as the sale will be restricted to those who can complete a cash purchase or take out a different loan.

This is why we’d suggest selling a property in need of work by auction as, typically, the pool of buyers will consist largely of investors and those who can afford to pay outright for a property and will be looking for such opportunities. 

How to price a renovation property

Deciding on a price can be quite difficult and is influenced by a number of factors such as location, condition, and estimated cost of repairs. You need to be reasonable and realistic with your pricing, as well as transparent about the state of your property. We recommend getting a free sales valuation to understand what price range you’re looking at, and, if you choose to sell by auction, you’ll be able to set a reserve price if you’re worried that the state of your property will result in a sale that is less than what you’d be happy with. Auctioneers and their teams are experts at dealing with this type of property and will be able to assist you with setting a price and marketing the property accordingly. 

Even a property that is just in need of some cosmetic repairs, rather than structural undertakings, can be better sold at auction as many homebuyers can’t visualise how the space can look or are put off by the pictures if the amount of redecoration work looks overwhelming. These types of properties can be sold by private treaty sale, through the open market, or by auction. It can be a better choice to sell by auction to target the right buyers who can offer a quick sale and a favourable price, as buyers on the open market may go through lengthy negotiations.

With that being said, if you want a higher sale price and the property only requires light touch ups, improving curb appeal and minor fixes such as new carpets, fixtures and a lick of paint can help to achieve a higher price in any method of sale. On the other hand, selling a house that needs major repairs is often quickest and easiest through an auction, where buyers are happy to buy a property as it comes and you do not have to undertake any repairs.

What are buyers looking for in a renovation property?

Condition aside, how can you know if your property will sell and what can favourably affect the sale price? Well, the following considerations should help you to clear up a few questions:

Location is key – Any home, even one with structural issues, can encourage plenty of bids and achieve a price higher than the reserve if it is in a desirable location. This can be in an area with development opportunities or an area that is already well sought after. 

Return on investment – Does your property offer the buyer a chance to resell at a higher price or provide substantial rental income? 

A quick transaction –  This can be an attractive perk for potential buyers who want to get started on a project and don’t want to go through the lengthy processes of the open market.

Declare your major repairs – Be honest about the work that needs doing, buyers don’t want to come across surprise issues and spend extra money getting surveys and quotes if they find you’ve minimised the scale of an issue.

Are you ready to sell your renovation property?

In conclusion, if you’re not undertaking the repair work yourself and have a minimum price in mind that you’re happy to sell for, we’d suggest proceeding to auction. If your property meets the factors listed above, then you’re likely to sell for higher than the reserve price anyway (condition and location dependent). This saves you the time and hassle of renovating before you sell, and you can remove the burden of owning a ‘problem property’ within 60 days. Learn more about selling at auction or contact us if you have any questions.

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