Simple Sale logo - Distressed Home Q&A - August 14th, 2020

Live Q&A Recording – August 14th, 2020

For your ease, we have provided a transcript of the Q&A Recording.

Hey this is Evan Shelley with Simple Sale Central Florida. We’re back for an August Q&A. The last few months we’ve been doing Q&As for commonly asked questions from clients that we work with.

We are a distressed home buyer throughout Central Florida. We buy properties in Orlando, Tampa, St Pete, Temple Terrace, New Port Richey, Ocala, Webster, Titusville, Melbourne, and we’ve bought properties in Palm Coast as well. So really all of Central Florida.

We’re just going to run through a few questions that we see with clients. Here we go.

1. Can I sell my house with code violations on the property?
So this one is kind of nuanced, where you can sell a property with code violations and we’ve bought properties with code violations. It’s common, though, that the buyer of the property is not going to want those code violations and will probably not buy it.

We’re different in the aspect that we do, depending on what the violations are, and there’s a difference between code violations and code violation liens and the type of code violation. If the code violation was for something simple, like an overgrown yard, that’s not a huge deal. You would just cut the grass down to a reasonable length, then Code Enforcement would remove the code violation, bringing you into compliance.

If you have code violations that have been a problem for a long period of time, you’ll have what’s called a code violation lien on the property. Typically those code violation liens will stack up at a couple of hundred dollars a day and if you have that lien for long enough and you don’t bring it into compliance it can run into tens of thousands if not hundreds of thousands of dollars.

An example of this, we bought a property in Tampa, Florida and it had 2 code violation liens at the time that we bought it. Those liens had been on the property for several years. So at $200 a day over several years it ended up being several hundred thousand dollars in code violations. So what we are actually in the process of doing – we brought the property into compliance. The place looks completely different. It was a very distressed property with many, many issues. After we brought the property into compliance by cleaning it up, we’re now talking with Hillsborough County about settling the code violation liens.

So with that being said, it really just depends upon your buyer, but you can absolutely sell it that way, but most buyers will not buy a property with code violation liens, but we absolutely do. We would probably buy a house with most any situation, but we would just have to evaluate the situation on the property before we made a final decision.

2. I found out my house has a tax lien against it while trying to sell. What can I do?
So this just depends on what type of lien. You have property tax liens, IRS tax liens. In the instance of a property tax lien, depending upon how much property taxes are – typically I’ve seen them everywhere from $1,000 to maybe $10,000.

If you’re selling the house, what typically will happen is the title company will take that $10,000 out of the proceeds. So let’s say you sell the house for $100,000. $10,000 of that will go to the municipality that is owed the $10,000 and the title company will send it to them. You can also pay it yourself outside of the sale, but typically your proceeds would just be reduced from the sale of the property by the amount that’s owed and that would take care of the tax lien.

So typically, it wouldn’t hold up a sale, but you would have to get that lien removed from the property before you can close. Typically a title company has handled those situations before so it’s not an issue where you can close and pay them at the same time the same day. It really just depends upon your situation but in most scenarios you can still sell.

3. My home was affected by a sinkhole, and it has not been repaired. Can I sell it?
Yes, you can definitely sell it. There are niche buyers that buy sinkholes. There aren’t a ton of people that buy them but there are definitely some, Simple Sale included. We will work with you if you have a property that has a sinkhole and it has not been repaired.

Those costs for repairs can be pretty high, but you never really know until you get the situation evaluated and then once you start the repairs, you’ll see how deep the sinkhole actually is and how much work and material is actually going to be used to stabilize that sinkhole.

So yes, you can definitely sell it. For the buyer it is a risky scenario. Typically with a sinkhole, that property is going to be sold at a steep discount because you could end up in a situation with a property that may never be able to be sold again to anyone because it may be condemned permanently.

In that scenario you can’t have tenants in the property and you can’t resell it to a retail buyer. There’s a lot of risk associated with selling and buying a property that has a sinkhole that hasn’t been repaired. But it’s totally possible and there are investors out there that will take that risk.

4. Are there any benefits to making repairs before I reach out to a home buyer?
I get this question all the time and it really does just depend. I feel like I’ve said that several times, but it really does just depend on what’s going on with your property.

There are some repairs that aren’t going to make much of a difference where you might think it would. You can take the time to go get, for example, you can go get… Let’s say you change the floors in the bedrooms because the carpet was a little worn. Is that going to increase the value of the property by more than what you paid for the carpet? Probably not.

It’s probably not going to be a significant difference to where you felt like the time you took to find a contractor and get the work done and move the room around is worth it for you. I just made that scenario up on the fly but some repairs don’t make much sense.

Now, if you’re going to go and completely update the house – absolutely, yeah. You could totally do that, and that’s going to be a huge value add based on the amount of money you’re going to spend compared to what the property is going to be worth afterward. It’s a great deal, but it’s a lot of work, and there’s a lot of risk of getting a bad contractor and things of that nature. It really depends on if you are a contractor or if you have any experience in remodeling and repairs.

In the situations where those big remodels would help the value of the house, it can become risky if you aren’t educated on handling contractors and working with contractors, making sure that they don’t overcharge you and making sure that the job is done right. If you’re just looking to get rid of the property, a lot of times it doesn’t make sense to make those repairs. If the repairs are significant, or if it’s a full update of the property.

If the property is in good shape and it hasn’t been updated, you’re typically still going to get more than you would think for the property even though it hasn’t been updated. As long as there aren’t significant issues and the property is fully functional, you are going to get more than you actually think.

It really would depend, I would say, in most scenarios it’s better for peace of mind just to go ahead and sell the property without taking several extra months and headaches to repair the property, because that’s not what you do. That’s what we do every day. We buy and sell properties, we fix up properties. It’s what we do, but for most people that may not be the best option.

5. I can’t afford the cost of a probate, but I need to sell my home. What can I do?
We have scenarios all the time, where someone needs a probate on a property and they can’t afford it, they can’t pay the lawyer for it, and they want to sell just to get rid of the property. A lot of times those people don’t even know they need a probate, so what we do in that scenario is just pay the lawyer fees. We take the risk of the probate, because probates aren’t always going to be smooth.

You can have errors, have disputes and probates can get ran out for months, if not years. You can find homebuyers that will pay for that probate. I know Simple Sale Central Florida does. I’m sure other homebuyers do as well, and that they’ll help you through the process, because we handle probates all the time. We’ve seen a lot of different scenarios and our lawyers have seen a lot of different scenarios so I’m sure that we can take care of you.

6. My house could use a lot of upgrades, but I don’t want to deal with it all. Will I lose a lot if I sell it as-is?
I think that’s pretty similar to the other question. Well, I actually ended up answering that question on the last one. It’s not the same, but if it has a lot of upgrades and you don’t want to deal with it. Like I was saying, you won’t lose as much as you would think selling it as-is as long as the property is functional.

Because in a lot of scenarios that house will become a rental property if it’s fully functional. That’s probably the highest and best use for it that can bring a higher value for the property. If it’s just remodel upgrades then you won’t. If it’s a property where there’s tons of issues where, for example, we were talking about the kitchen. If the sink doesn’t work and the dishwasher doesn’t work, none of the appliances work, the cabinets are on hinges that don’t work, then making that upgrade would be a significant help to the value of your property. It’s just a lot of work and a lot of headache. If all the appliances work fine, the sink works fine, the dishwasher works fine, the cabinets are fine – it’s just dated, then you’re probably not going to lose as much as you think you would and the property still does have value as is.

7. What’s up with those “we buy homes for cash” signs on the side of the road?
So those signs are typically people – it’s just a form of marketing – and those people will buy houses or they’ll have investors. They’re just using that form of marketing because a lot of people will, in the right locations, pass by those signs just like billboards. I don’t really see any significant issue with it.

The only problem I would say with working with those people, is possibly credibility. A lot of times those people aren’t established, those companies aren’t established. They’re possibly new to the business, or may be a little shady with their tactics of working with sellers. That’s not speaking for every one of them, but for some of them that will be the case.

If it’s a reputable company, they’ll probably be trying to market to you on different avenues like Facebook for example, Google, billboards, where you’re representing a brand with accountability and trustworthiness and good reviews. It’s going to be hard to get reviews from a sign on the side of the road. So I would just be cautious. It doesn’t mean all of them are that way, but it does definitely mean that there’s a possibility of working with someone who doesn’t operate in the correct manner and look out for the interests of the client like they should.

8. How can I get the most value out of my distressed property?
That’s a good question. I would think, I mean, some of the things you can do that are the easiest is – let’s say for example, that the house has a lot of items in it. Inside, outside, everywhere. You could probably pay someone a thousand, couple thousand dollars to come in and clean out the entire property and just have no items, the house is empty and it’s not a mess. That could bring a pretty quick value add. You may put a thousand in and it may get 5 or 10 more out of it just because it just looks more appealing.

It’s not a significant difference in the property, but a lot of times people that have properties in that situation, like landlords – they’re just over it. They’re just ready to sell, they just want to be done with it and I can totally understand that. You know, it’s like anything else in life that you’ve had. If you’ve had something for a long time and you’ve had bad experiences with it, you just want to get rid of it.

But that would be one easy way, just anything cosmetic. If you have holes in the wall and you know how to repair drywall that would be a pretty quick way to make the property more appealing. You can even do little things like changing out doors. The front door could make a significant difference if it’s very, very old and has issues. Cosmetic stuff can go a long way with a distressed property, where for the buyer it’s a lot more appealing.

Now when you start getting into, like we were talking about, trying to do full home upgrades, unless you’re very experienced in it you’re going to have a lot of headaches with contractors, and it’s going to take a lot of time. I would just say cosmetic stuff would be the easiest way where the property is more appealing to the buyer.

With a distressed property, say with legal issues, it’s clearing up those legal issues as much as you can without a lawyer. If it’s a family dispute, you should try to work that out with your family before doing a deal with a home buyer. If you have a situation essentially figured out at that point, the property is going to bring a lot more money because it’s going to be a lot less headache for a home buyer. It’s going to be a lot more appealing to them.

9. If I’m interested in selling, what’s the easiest way to get an offer?
I would say there are several different avenues for selling, at this point. It really just depends on the condition of your property. Let’s say your property is in solid condition, has no issues – no legal issues that you know of, anything of that nature.

Typically, an iBuyer is going to be your best bet. An iBuyer would be something like OpenDoor or OfferPad. They can pay premiums for properties that a lot of buyers cannot and typically from what I’ve seen those offers are higher than you can get anywhere else.

I will say, though, we recently had a property in Bradenton in which we actually offered more than OfferPad did, which was unusual for us, we typically would not. I’m not sure what happened in that scenario, but typically they will offer significantly more than we can. So for most people, that is going to be the best bet if the property is not distressed.

For people that are trying to span style=”font-weight: 400;”>sell a distressed property, we’re – you could term it – a distressed iBuyer, where we really only buy distressed properties with significant legal issues, significant repairs. There has to be issues with the property for us to have interest, because we’re in the business of buying those distressed properties and taking care of the situations and then re-selling the property rather than just quickly buying a good looking property for a little less and then reselling it. That’s not really our model that we work with.

So it really depends on your situation. I mean, if it’s a distressed property, then we could definitely get you an offer. Another, are other companies that make offers on distressed properties. In some scenarios we’re the only company making offers because the property is so distressed, has so many legal issues. We have a property right now that we’ve been working litigation on for 8 months, and that property – we still haven’t gotten all the legal issues fixed yet.

But that’s what we do, and those are the properties that we buy. There, I would just search online – there’s Simple Sale Central Florida and there’s a couple other legitimate buyers in Central Florida and then, of course, Zillow, OpenDoor and OfferPad if your property is not distressed.

10. Will you buy my home even if it’s not distressed?
So that, I tied that one back into the last question. We typically do not. We’re just not competitive, it’s not our model. I mean, we’ll make an offer and we’ll make a credible offer where we’re not going to change the offer price on you or anything of that nature, but, as far as buying it just to buy it we really probably aren’t your best option. If it’s not distressed at all and you’re not wanting to just get a quick cash offer, then I would highly recommend you list the property with someone that you know and trust.

We do have a brokerage now, Simple Sale Realty, that will list your property. We can list that property for you if it’s not distressed, but I highly recommend working with someone that you know and trust. That would be that would be your best bet for a good experience. We have highly qualified realtors at Simple Sale Realty that I’m sure we can help you out with that listing.

11. Are there any fees associated with selling the property?
This is probably the second most common question I get. So there really are not any fees. If the property offer is $150,000, that is the amount that you will receive, minus if you owe any property taxes. If you don’t owe any property taxes it will be $150,000, flat.

In scenarios where there’s liens, you’d subtract the liens, but as far as just outright fees, there aren’t any. We pay all closing costs for the property, so you don’t have to worry about it. So, to fully answer the question: No, there aren’t any fees, it would just be items that are owed by the seller – the owner that’s selling the property, like property taxes. If there’s code violations, you’d have to pay those, but aside from that, there won’t be any fees associated.

I know other models — I believe the iBuyers – they have an offer and then they subtract fees from it. Those fees are all laid out, but there are fees associated with those closings that you have to pay attention to.

12. How long can I stay in my property after closing?
This is a really common one too. Typically we will allow, like, 14 days after closing. We’ve done more, but typically if it’s more than 14 days you’ll essentially rent it back for a month for market rent price in order for you to get yourself situated into another property. So that’s not an issue. But 14 days or less, typically you can just stay on the property and there’s no issues. So, yeah I think that fully answers it.

That was all of our questions. If there’s any other questions you can type them in the comments now. I haven’t seen any comments, so I think that will wrap it up for today, and I’m sure we will be back next month in September for another Q&A.

And, as always, if you are looking to get an offer on your distressed property you can go to simplesalecentralflorida.com. We’re rapidly growing throughout Central Florida like I was saying, buying properties in Bradenton, Sarasota, Tampa, St. Pete, New Port Richey, Temple Terrace, Orlando, Ocala, Kissimmee. I’m just trying to think of all the places. And then on the east coast as I mentioned earlier, Titusville, Melbourne, Palm Coast, Daytona.

So we’re looking everywhere, and we’re actively buying everywhere, even with everything going on in the economy, we are trying to purchase properties and keep moving. So if you have a distressed property you’re looking to sell, feel free to come to the site – simplesalecentralflorida.com.

You can check us out on Facebook, you can check us out on our Google reviews, and if you are looking to sell your distressed home, I would highly recommend working with someone with great reviews and a lot of credibility. You can typically tell that pretty quickly after looking at their social medias and their reviews; it will give you a good idea of the company that you’re working with.

OK, I think that’s it. I will catch up with you all next month. Thanks. Bye.

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