Selling your fixer-upper

I think you sell a fixer-upper differently than you do a regular home.  A fixer-upper is going to be attractive to a completely different customer base.  Here are the points that I would recommend when selling a fixer-upper:

1.  Condition - Accurately describe the condition of the home for the MLS and other advertising but also talk about the upside.  It can be very hard for people looking for fixer-uppers to find fixer-uppers.  Often, these houses get described as if they are in great condition or, at best, in a neutral tone.  Buyers that look at your house will be upset because it isn't as it is described and buyers that are looking for fixer-uppers won't know to look at yours.  The house that gets accurately described and categorized will be the one that gets the right type of buyers and will sell quicker.

2.  Price -Price your house right - If your house is a fixer-upper, remember, it isn't going to sell for as much as the finished house down the block.  This seems obvious but it is a lesson that most fixer-upper owners have to learn.  To get someone to be interested in your house is going to require that your pricing allows them to make some equity from their efforts.  Trying to squeeze out every dime when selling will only make your holding costs higher.  And unless there is some larger aspect of the home, ie historic neighborhood, lake house, etc., you will not be able to get a premium for the potential.  The fact of the matter is that most fixer-uppers would sell for more if they were priced right from the beginning.  Most fixer-uppers end up selling after the peak seasons and for less than they should have.

3.  Marketing - Market your house to the right people.   Who are these groups?  There are several groups that you should get your house in front of:

• First time DIY'er -The first time Do-it-yourself'er group is an interesting group.  I have found that this group is generally younger and is looking to create some sweat equity.  This group often has parents that did fixer-uppers and often have a history in the trades.  This group will probably want to take on a manageable project, not a home that will require significant expense.  This group is perfect for the dated homes in Madison.  Often these homes need new paint, flooring, kitchens and bathrooms.  But it should be work that they can primarily do themselves with little outside help from contractors.  Often this group doesn't have a lot of extra cash.  If you want to appeal to this group and your home doesn't fit this model, perhaps offering credits or offering to do certain work before closing will be enough to make this buyer comfortable.
• Perennial DIY'er  - Many people who do fixer-uppers have done many fixer-uppers.  While my wife and I currently aren't planning to move, if the right fixer-upper came up, we would jump.  A lot of us are that way.  If we are not working on something, we are probably looking.  So, really a lot of us could be considered border-line investors with the houses we live in.  Many of us have owned several homes and are comfortable with the process.  This group is very good at assessing the work needed and also assessing price.  This group isn't as scared of potential defects but will want to be compensated for their work.
• Investor - Your home could be attractive to an investor.  If it is, it is probably because your house is in a very marketable neighborhood and is priced right.  Obviously there are many types of investors and their success can vary.  I have found that the good investors will come in quickly with a reasonable offer and will close quickly.  They are usually very professional and little goes wrong.  Their career is investing and they have many contacts throughout the city.  On the other hand, there are a lot more inexperienced investors out there recently.  The popularity of "Flip this House" and other TV shows have made flipping seem very appealing and easy.  This couldn't be further from the truth in Madison and many mistakes are being made.  If you have a buyer who is an investor, you need to be very careful.  Often their primary motivation will be money and the offer could be dicey.  They may not have an accurate sense of the market and they may try to work off of late-night TV real estate schemes.  While these schemes may work in other parts of the country, Madison has a very strong market and you need to be wary of non-traditional offers.

4.  Experience - Have some experience in your corner - When I first started investing, I went to a ton of open houses and talked to realtors about my idea.  It took me a long time to find the realtor that I thought new what I wanted and had the experience to help me.  My relationship with that realtor formed a bedrock of knowledge and experience that allowed me to be successful in the future.  I bought and sold many houses with her before I was ready to go out on my own.  Even then, I still nearly made a few big mistakes.  But I had the experience to know not to make it.  I still bounce my potential purchases off experienced real estate professionals.  I find that too often your emotions kick in and it is great to have a contrarian to help you get back to reality. 

When you are looking to buy or sell a fixer upper, having the right team together will make all the difference.  If you are selling, you need to accentuate the positives and make the buyer comfortable with the negatives.  Having someone who can market your house to the right group of potential buyers is key as well.  And finally, when you get to the point of negotiating, having someone who knows about the entire fixer-upper process will be invaluable.  Many times I have had house deals that have almost fallen apart because of inspection issues and unknown defects.  Many times I have had lenders that have gotten uneasy with these deals.  It is important to have someone who has the experience to help you actually get the house sold.  Fixer-uppers are not like regular houses.