Three years ago, when the home-sale market peaked, buyers frequently bought "as is" regarding deferred maintenance, like wood-destroying pest or "termite" work.
Home prices were rising in many areas, and buyers were flush with cash and could line up a mortgage even if they didn’t qualify. Today, prices are still declining with a few exceptions; many buyers are cash-strapped; and they need to put more cash down and go through a rigorous qualifying process to get a mortgage.
In the hot seller’s market of several years ago, many sellers invested money to make their homes look pretty in order to attract multiple buyers and drive the sale price up. But they usually didn’t spend much curing deferred maintenance, because buyers bidding in competition often bought "as is." Sellers focused their fix-up-for-sale efforts on cosmetics — paint, staging, and replacing outdated light fixtures and flooring.
HOUSE HUNTING TIP: A home still needs to look good to sell in today’s market. However, a difference between this and the previous market is that a property that has a lot of deferred maintenance can be hard to sell unless the price is discounted significantly. And, even at a discounted price, it may be impossible to sell if there is a lot of inventory of similar homes on the market that don’t require as much work.
One issue from the buyers’ perspective is the hassle of getting the work done. A more restrictive concern is finding the cash to pay for the work.
The ideal way around this problem is to have defects that might impede the sale of your home corrected before you put your home on the market. This requires planning in advance and finding a way to pay for the work.
Sellers who don’t have cash readily available should look into using a home equity line of credit (HELOC). For instance, Charles Schwab offered a HELOC with an interest rate of 3.99 percent as of mid-May 2009. However, there must be sufficient equity in the property to qualify for a HELOC.
Marketing a listing with a clear "termite" report or a new roof can help sell your home. Buyers don’t have to worry about how they’ll pay for these necessary repairs because the work has already been done. …CONTINUED