Distressed Home Q&A Recording – May 21st, 2021
For your ease, we have provided a transcript of the Distressed Home Q&A Recording.
Hey, this is Evan with Simple Sale Central Florida. We’re back again this month for our May Q&A where we go over questions that are commonly asked by our clients. Simple Sale buys distressed properties throughout Central Florida. That includes Tampa Bay, St. Pete, Pinellas all the way to the Bradenton area. Then going east, Orlando, even up north, up to Ocala, down to Kissimmee. We also buy on the Space Coast, so Brevard County and areas around Brevard.
The mission of the company is to bring transparency and accountability to distressed home sales. What that means is we work very hard to help our clients out of their situation. We try to help them get the best solution even if it isn’t us. It may be going another direction, but we strive to help out our clients. So, with that introduction, why don’t we go on into the questions?
1. What does “distressed” mean?
A distressed property can mean a lot of different things. A lot of people just think that it’s a foreclosure, but we don’t term it that way. It could mean excessive repairs, liens, code violations, or other forms of legal issues. It could be excessive repairs or a foreclosure.
Whenever there’s a situation where the seller is struggling to maintain the property or take care of a legal issue, we come in and help them. It really just means any type of situation where it’s uncommonly difficult to resolve. We work to try to resolve these problems for our clients.
Read More: What is a Distressed Property?
2. I started making repairs on my house, but didn’t finish them. Can I still sell my house if it needs repairs?
Of course. We buy properties like that all the time. Maybe the person started a rehab and needed to move; started a rehab and it became more costly than anticipated. That’s not an issue at all. We would gladly take a look at the property and see if it’s something we can work on.
It definitely can still be sold. It will take a certain type of buyer. There are buyers out there that will buy a property that needs repairs, but not everyone will. Your standard iBuyers and things of that nature, they won’t if the repairs are excessive. But you can definitely sell the property. You just have to find the right buyers that want to take care of it.
Read More: How to Sell a House that Needs Repairs
3. Can I sell my house if it’s not up to code?
Yes, you can. It’s kind of like the last question. If the property isn’t up to code, you won’t be able to sell to your traditional retail buyer through financing. You’re going to have to sell to someone who can pay cash for the property and take the liability for those code violations. Typically, it will be an investor that would buy the property, fix the issues, and resell the property.
But you can definitely sell it. It’s just going to be a particular type of buyer that’s going to be looking to buy a property like that. You have to talk with someone who is experienced in purchasing code violations. It also depends on how far you are into the code violation. Are there already liens on the property and things of that nature?
Simple Sale Central Florida is one of the few companies that will actually close on a property with existing liens. We’ve taken on that risk in the past and we’ll continue to do so on projects that we think are worth it.
4. My house is in very bad condition. Can I still sell it?
Of course. Excessive repairs fall under what we term “distressed.” Just because your home’s in very bad condition doesn’t mean you can’t sell. You can definitely sell. You just need to find the right kind of buyer that can deal with excessive rehabs and things like that. You can definitely still sell. It’s not really a problem at all.
It really depends, but most investors would try it. It depends on if the house is an older wood-frame house or if it’s newer, possibly a less aged blockhouse, but it still has a lot of issues. You know, you’re going to vary on what buyers are going to want to take the risk.
5. Any tips for selling a house that needs work?
I see this a lot where people kind of take time to do things to distressed properties that don’t really raise the value. They may try to clean some walls or something like that and honestly, those types of things are going to be a waste of time. Better options are fixing serious issues like the roof or AC.
Fixing anything costly is going to be your best way to get the most bang for your buck. I would try to take care of the bigger issues. Putting a brand new AC or roof on the property. Even if the interior isn’t that great, those types of things will help raise the value of the property.
Updating a bathroom or the kitchen… a lot of those things would help, but you really need to make sure you know what you’re doing. Make sure that if you hire someone, you trust them and they know what they’re doing. I often see people stressed because they chose a bad general contractor or an unlicensed contractor that did the work and didn’t do a very good job, and didn’t actually help the value of the house very much. You just have to be very careful.
Read More: How to Sell a House That Needs Repairs
6. Can I sell a house with a lien on it?
Yes, you can sell a house with a lien on it. There aren’t that many people that will buy it. We WILL buy the property, but for the most part a lot of investors will not buy the property with liens unless they’re re-negotiated before the close, and it all depends on how big the liens are.
In the past, we closed on a property with $360,000 in liens, and the house was worth maybe $200,000 or $175,000. It needed a ton of work, but we closed on that property and took the risk. It took a long time to negotiate the liens. Those are the types of things that we do take the risk on and will take a look at; we would definitely be interested.
7. Are there benefits to selling my home to a cash home buyer?
Kind of reiterating some of the things I’ve already said, there are definitely benefits. If you have a distressed issue, but can still put it on the open market, typically that will be better. We always consider that option with our clients. We have a brokerage and will list the property for them. 99% of the time they’re going to net more money out on the open market if they can sell to a retail buyer. It’s possible you’ll just get a higher cash offer by putting it out on the market.
But, there’s certain things that have to be done. Listing a property with a bunch of liens on it is not going to work. The benefits of selling to most cash-only buyers is that you’ll have far less showings. It’s going to be a faster close. And less stress, than if you put it on the market. There’s a high probability you get more money, but you’re possibly going to do more showings. It’s going to take longer.
It really depends on your situation. For about half of our clients looking for a cash offer on their distressed property, we end up listing it just because it’s a better outcome for them. We make a commission on the sale, so we’re fine with it. We do have to make money on our transactions to continue doing more transactions and helping people.
There can be benefits depending on your situation. Sometimes it’s a disadvantage, but it really just depends on your situation if you need to sell to a cash-only buyer.
Read More: What is a Cash Home Buyer?
8. Can I sell my home before foreclosure?
Yes, you definitely can. We don’t work with a ton of foreclosures, but we’ve bought them before being foreclosed on a few times. You can definitely sell your house. It’s not an issue. The only issues are going to be you need someone and make sure they’re going to close. It can’t be someone just wanting to come in and get a mortgage on the property. They’re not going to be able to buy it.
Probably the most important thing is making sure whoever you work with is actually going to close on the property. You don’t want to go 30 days thinking you’re closing, heading into foreclosure, and then not close. I’ve seen that recently.
We’ve worked with clients and someone’s offered them the deal of a lifetime offer on their house. If you only have 30 days until foreclosure, you’d better make sure they’re going to close. Unfortunately, that’s how it goes. So, yeah, to answer the question, you absolutely can sell a home before a foreclosure.
Read More: Can You Sell Your House Before Foreclosure?
9. I’m trying to sell my home, but it’s in probate. Is there anything I can do?
Well, you definitely need a probate attorney to get through that process. Don’t try to do it alone. There’s too many laws, too many complications. I would definitely hire a trusted probate attorney.
If you get a probate attorney at random, just make sure they have great reviews and a good reputation. Some of them can be so busy that they don’t do a very good job. They have so many other things going on. Make sure you work with a law firm that has a great reputation, and will get you through the process as quickly as possible. Sometimes it can take quite a while, several months.
That’s my biggest recommendation: don’t try to do it yourself. Don’t even try to start doing it yourself. Go to an attorney, find a good, trusted attorney. That’s what we do. We typically work with the same one or two attorneys all the time. They do a great job, and I know they’ll take care of the clients that we work with.
10. Is there anything I might not know about selling a house as-is?
It really depends on the as-is condition. What I see, probably most often, is when someone wants to sell their house as-is, and let’s say it needs $40,000 of work. Sellers often don’t understand the discount they’re going to have to take on their house for someone to buy it.
Unless the person that’s buying it is going to be living there, it has to be resold. To buy a property, resell it and make money, there is a discount that has to be put in. There’s so many costs associated for the rehab, for the holding costs of the property, which is taxes, insurance. It is closing costs, which is 2%. It’s commissions to agents, which is anywhere from 3% for one agent or 5-6% for two agents. All these things add up.
In order for companies like us to make money, we do have to buy that property for probably less than what you think it’s worth. But it’s not that we’re getting greedy or anything of that nature. We understand the costs associated. There are many people that have bought and sold one house or two houses. But in order to stay in this business, there’s a lot of risk in buying a house. There’s a lot of unknowns. There’s things that can go wrong.
So, we have to buy the property at a price to make sure that we can buy and sell a lot of these and help a lot of people with their situation. We are open to being transparent about exactly what something is going to cost and exactly how much we’re going to make on the deal if everything goes according to plan. But it doesn’t always go according to plan, either. Sometimes we don’t make anything.
People don’t talk about that side of the business where you buy a house at what you think is an acceptable price, and you don’t make anything. Some people outside the business are convinced that you’re always making a ton of money. That’s not always the case. But we continue to do it because we are very realistic, patient and we try to do the right thing.
So, I think that is it for the questions. I’ll check the comments. I don’t see any comments. But as always, thanks for watching this. If you’re watching it live or later, I do appreciate it.
If you want to get in touch with us call us at (407)338-4183. That’ll get you to us. You can tell us about your property that you’re looking to sell. And you can also go to our website, SimpleSaleCentralFlorida.com. I do appreciate it. Thank you. Bye.