Inherited A House, Now What?

And now an “Ask Annie” question straight out of the mailbag!

I am about to inherit a house, would it make more sense to sell it to “ugly house” buyers or should my fiance and I attempt to fix it up ourselves and try to sell it with a real estate agent? We live in Houston and the home market hasn’t dropped quite as badly here as it did in other areas. But my friends parents live not to far from the house and are having a hard time selling it. Any advice will be appreciated and I really could use it! Thanks Ann!  -Troubled in Texas

 
Hi there Troubled!  I would recommend that if the house needs work, that you just sell it to an investor or an “ugly” house buyer. Even if it doesn’t need that much work, you are still ahead of the game these days to sell to an investor. If the house is owned free and clear, you will have the flexibility to negotiate on price.

Be prepared – they are not going to offer you full market value as they are buying the house to fix/resell. They need a margin to make it worth their while.

It will be a challenge for you, not having rehab experience or a mentor to work with you, to get the house saleable. In addition, if you decide to keep and fix it yourself you will have to contend with:

  • maintaining the property ie: keeping the gas/water/lights on
  • keeping the lawn mowed, windows unbroken, and exterior upkept so that you don’t end up with village code violations and fines
  • keeping it in showing conditon – making sure its clean, dust free, no vandals or neighbors dumping garbage on the property because they know it’s vacant…one of my favorites that happens!
  • paying property taxes and homeowners insurance until the time of the sale, which depending on where you live can add up pretty quickly (also, vacant property policies are usually pretty pricey which is something else to think about)
  • doing all of this for at least 6 months, possibly longer since the market is so soft
  • lighting novena candles so that when you do finally find a buyer after 8 – 12 months of marketing they can actually get financed…loan officers that I speak with are closing maybe 1 or 2 out of every 10 loan applications that they take in

If you end up selling to an “ugly” house guy, you will get what LOOKS like less money up front but in actuality isnt when you add up the hassle factor, utilities and holding costs. You dont want to be running back and forth to clean, to let people in for showings, etc. Additionally, you wont be paying out a 6% commission on top of a year’s worth of holding costs if you sell to an “ugly” house guy. These guys typically pay all cash and close within 30 days or so, which means you dont have to worry about loans falling apart after a year of marketing the property and then 60 days of the potential buyer’s mortgage application processing. Loans dont fall apart right away – they typically fall apart days prior to closing.

If you do decide you’d like to take a crack at rehab, head to a local real estate club (which you can Google) or speak with investor savvy real estate agents about finding a rehabbing mentor.  It would make your first time a lot easier and cost a heck of a lot less to have a guide.

I would only recommend rehab if you have a passion or interest in it or have an experienced mentor for your first time at bat.  If you’re looking for less troubles in Texas and a whole lot less aggravation, I’d sell it to “ugly house” buyers.  Thanks for writing in Troubled!

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