I posted on our blog for sellers yesterday, and it seems to have hit a nerve. So many hits! Lots of people enjoyed it on our Facebook page, so I thought I’d share it here, with some added thoughts for our fellow real estate investors.
One of our Facebook readers pointed out something that most of us know, but perhaps some of us who are just casual rehabbers or are new to the business haven’t taken seriously enough–and that’s the need to get permits on any structural work you do. (You may recall that’s what delayed out Bobcat project for so long). But it’s so important.
If you do not get permits for the work done on your house, you might have a lot of trouble when time comes to sell. An inspector can take note of any additions or renovations and request permits. If you don’t have them, you may have to do something like tear down a room or garage. Or they might be so kind as to do what happened to someone Carol knew. They gave her retroactive permits, but after a hefty fine was paid, AND the seller was required to repay ten years’ worth of back taxes.
Where did that money come from, you wonder? Why, it came from the profit from selling the house. Over $30K. That was pretty much ALL of the profit. So, go ahead and shell out the money for permits!
So, do you have any more big things NOT to to do if you want to sell a house, from an investor standpoint? The ones below are from the viewpoint of someone selling a house to an investor and maximizing what they can get. But, we also want to maximize our sale. I’d love to read your ideas in the comments!
Here’s the post from our other blog:
It’s quite common for people thinking about selling their house to start making improvements in hopes of a higher selling price. This can be a great idea. However, there are some things to think through before making a lot of changes to your house.
- Find out what works in YOUR neighborhood. If you are surrounded by manufactured housing and crumbling farm houses in a rural area, don’t fix your house up to upscale suburban standards. You won’t get a return on your money!
- Stick with neutrals. We recently looked at a house with brand-new tile. Half was pale blue, half was a mix of pink and gray. That’s not neutral. It will only appeal to a small subset of their potential buyers. Also, navy blue paint? Not neutral AND hard to cover up.
- Look at other renovations and do what they do. Spend time on Pinterest or Houzz. The house in the photo would have much better resale value if, instead of “button fixtures” all over the living area they’d put in can lights. Pricing is about the same.
- Have your renovations done by someone who knows what they are doing. This means you check references and look at the past work of people you hire. You’d like the electricity to actually work. You’d like the light fixtures going in the same direction (see below).
- Also, think hard about how long and how costly your home improvements are. If they take months and cost a lot, you may very well come out ahead by selling your house below retail to someone like us, because you won’t be paying the holding costs (mortgage, utilities, and insurance) or the renovation costs. Besides, if you make the wrong decisions, you might actually make your house harder to sell, so don’t risk it unless you know what you’re doing!
- This is very important: don’t do work that’s not permitted. You could be asked to remove un-permitted additions before you sell, or at least pay, and pay big.
There are a LOT more things to consider than what I just shared. Here are a couple of good lists to start with: