How to Sell a House in Need of Renovation or Repair – Have You Considered an Auction?

Posted by Clive Emson Auctioneers on 23rd August 2023 -

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Buying a property that ‘needs work’ can be an exciting prospect. Buyers who intend to live in the property can put their own personal stamp and create their dream home, renovating from the bottom up. For investors, a property in need of refurbishment or repair presents an opportunity to bring the property back to its former glory or add value to either rent out or sell. But what about selling a run-down house or property?

If you’re looking to sell a property that has seen better days, you may have already faced challenges and setbacks. Properties that require modernisation, refurbishment or repair work can seemingly be difficult to sell for a number of reasons.

In this article, we look at the options for selling your house in need of repair and explain why a well-marketed and secure property auction may be the best opportunity to sell any home in need of some TLC.

What are the common pitfalls of selling a property in disrepair?

You may be facing two options – keep your property and embark on an exciting project to restore it to its former glory, or, sell the property for the highest possible price. Should you not be in a position to carry out the repair works yourself, you may be facing the following hurdles when looking to sell your property.

Limited buyer pool on the ‘usual’ property sale websites: Properties in need of extensive renovations often appeal to a specific group of buyers, such as investors, experienced renovators or those looking for a self-build/renovation project . The pool of potential buyers may be smaller compared to those looking for homes in A1 condition, which can make it more challenging to find interested parties.

Extended time on the market: Selling a property that needs significant renovations can take longer compared to selling a well-maintained or updated home. Finding the right buyer who is willing to take on the project and negotiate a fair price can be time-consuming, potentially leading to an extended time on the market.

Price negotiations: Buyers interested in properties needing extensive renovations often take into account the costs involved in the renovation process when making offers. Sellers may face more negotiations and lower offers due to perceived risks and additional expenses associated with the necessary repairs.

Financing limitations: For buyers, obtaining financing for a property in disrepair can be challenging. Traditional mortgage lenders may be hesitant to provide loans for properties that do not meet minimum habitability standards. Buyers interested in purchasing a property in need of renovation or repair may require specialised financing options, limiting the potential buyer pool further.

Marketing and presentation difficulties: Presenting a property in disrepair to potential buyers can be a challenge if not marketed to the correct pool of buyers. Sellers need to accurately convey the property’s potential and highlight its redeeming qualities whilst also being transparent about its current condition. Effective marketing and showcasing the property’s future potential can require additional effort and creativity.

Emotional attachment: You may have an emotional attachment to your property which is completely understandable – especially if you’ve invested a lot of time and effort into the property in the past or perhaps grew up at that property. The prospect of selling a property that needs significant renovations can be emotionally challenging for some sellers.

So what is the best way to approach a sale in this case?

Step 1 – assess the condition of your property

The first consideration when selling a property in need of renovation or repair is the scale of the work required.The type of repair required may influence your sale options:

The structurally sound ‘light retouch’ property – You might have a home that is perfectly sound structurally, but that lacks modern décor and would possibly benefit from a contemporary kitchen, heating system and bathroom. The property is simply in need of a facelift to increase its market value and attract potential buyers or tenants. Depending on whether the next owner will be living in the property or renting, the property likely needs:

Painting: Applying fresh coats of paint to the walls, ceilings, doors, and trim can instantly freshen up the property and give it a new look.

Flooring: Replacing worn-out carpets or refinishing hardwood floors can significantly improve the overall appearance of the property.

Lighting: Upgrading outdated light fixtures or adding new lighting can enhance the ambience and functionality of different areas within the property.

Kitchen and bathroom updates: Making minor upgrades to fixtures, countertops, cabinets, and appliances can breathe new life into these essential areas.

Exterior landscaping: Enhancing the property’s exterior by improving landscaping, repainting the front door, or replacing worn-out exterior features can make a positive first impression.
Minor repairs: Fixing minor issues such as leaky taps , squeaky doors, or cracked tiles can go a long way to improve the marketability of the property.

The ‘long term unoccupied’ property – properties that have been empty for some time may require more in-depth work, from repairing roofing, addressing damp, or replacing unstable eaves, brickwork and load-bearing walls. A long-term unoccupied property can be at risk of falling into disrepair due to several factors:

Lack of maintenance: Without regular maintenance and upkeep, a property can deteriorate over time. Issues like leaky roofs, plumbing problems, or pest infestations can worsen without timely intervention.

Weather damage: Unoccupied properties are more vulnerable to weather-related damage, such as water leaks, mould growth, or structural problems caused by exposure to the elements.

Vandalism and theft: Vacant properties are often attractive targets for vandalism, theft, or squatting, which can further contribute to their disrepair.

Lack of monitoring: In the absence of regular occupancy, potential issues may go unnoticed. For example, a small leak or electrical problem could escalate into a major issue if left unattended.

The ‘completely uninhabitable’ property – An uninhabitable house is as described – a property or dwelling that is not suitable or safe for human habitation. It’s in a state of disrepair, meaning that the conditions within the house are such that it is not suitable for people to live in or occupy. Typically, the house may be suffering from the following ailments:

Structural issues: If the house has severe structural damage, such as a collapsing roof, crumbling foundation, or significant cracks in the walls, it may be considered uninhabitable.

Safety hazards: The presence of safety hazards like old exposed wiring, faulty electrical systems, gas leaks, or dangerous mould and asbestos can render a house uninhabitable.

Lack of basic utilities: If a house lacks essential utilities such as electricity, running water, or a functioning sewage system, it’s not fit for habitation.

Health concerns: Houses with severe infestations of pests, including rodents or insects, or extensive mould growth that poses health risks can be considered uninhabitable.
Code violations: Houses that violate building codes and regulations, such as improper or illegal construction, poor ventilation, or that do not follow modern, up-to-date fire safety regulations may not be legally habitable.

Best options to sell Light retouch Properties

Best options for sale: Auction or private treaty

Although some agents may be reluctant to manage the sale of a property that is not currently habitable or that requires extensive repairs, there is no reason against selling through a private treaty sale. You’ll often see these types of properties for sale through highstreet estate agents.

These properties can suit both investors and those looking for their new home and with a bit of imagination and priced correctly should sell very easily.

However, even a property in good condition requiring some renovation can be challenging to sell quickly since most homebuyers are put off by the property photos or cannot envisage how the space would look and feel once redecorated.

It’s just as effective to sell this type of property via auction which could be a better option depending on your situation, for instance, if you’re looking for a quick sale.

We’ve written an article entitled ‘Should I auction my home’ that outlines the reasons why you may choose an auction in this case.

In fact, in a post-pandemic world in which a large proportion of office workers can work remotely, many homeowners living in city locations are opting to sell their high value properties and buy their ‘dream property’ in the countryside via auction. Read more about this here: Moving out of the city with auctions.

Best options to sell long-term unoccupied and uninhabitable properties

Best options for sale: Auction

For properties in a more severe state of disrepair, you’ll find that auctions really come into their own and address the pain points that we discussed earlier in this post. Many property renovation enthusiasts, developers, investors and buyers hoping to purchase a home and add value review auction lots, making this a viable, fast and reasonably certain way to achieve a sale. Here’s why a property auction may suit you.

No need for repairs: Selling a house in disrepair at an auction allows sellers to offload the property without investing additional funds into repairs. They can avoid the expenses of fixing structural issues, upgrading systems, or addressing cosmetic concerns.
An abundance of buyers: The challenge of selling a house in disrepair isn’t only listing the property and finding an agent with the confidence they can achieve a sale; it is about finding suitable buyers who will be interested in purchasing a renovation project. Auctions attract the entire spectrum of buyers, including investors, developers, speculators, re-sellers or individuals who are willing to undertake renovation projects. A reputable property auctioneer will have built a large database of buyers who are ready, willing and most importantly, able to take on any projects that they deem commercially viable.
Marketing know-how: An auction house will know how to market a property in need of renovation. Professional, high-quality marketing is an essential element of any property sale, with details, images, videos, descriptions, energy performance ratings, location details and legal information relating to the property.
Transparency and competitive bidding: Auctions provide a transparent and competitive environment where potential buyers place bids on the property openly. This transparency can provide sellers with confidence that they are receiving the highest possible price for their property, as buyers compete against each other in real-time.
Speed of sale: Selling a house in disrepair through traditional methods can be done very quickly. Typically, once the electronic gavel falls, buyers have 20 days to complete the purchase, meaning you can be free of your property in a very short space of time.

In every case, selling at auction can maximise the publicity and reach your property achieves, where the auctioneer will compile detailed particulars and often a video walkthrough, marketing the lot to a wide range of bidders , including those buyer groups we mentioned above.

Types of Buyers at Property Auctions

As we’ve mentioned, buyers searching for properties through conventional sales listings tend to be homebuyers/owner occupiers. While many will consider a property with the potential to add value, only some will have the know-how or budget to invest in a bigger renovation or restoration project.

So, why are properties requiring repairs so much easier to sell at auction? The answer is that the bidders at an auction are accustomed to seeing beyond exteriors, aesthetics and décor and can visualise what the property will look like with changes to the floorplan, interior and furnishings. They are also prepared to complete the transaction with readily available funds or have specific finance already in place.

Although anybody can register with the local auctioneer, verifying their identity beforehand, the largest groups of bidders include:

Developers looking for properties, plots of land or larger sites which have strong potential to be used for new housing or construction.
Resellers , people who actively look for properties needing repairs which they can buy for a fair value, renovate, and sell for a profit, often carry out the work themselves or with an established team of contractors.
Landlords searching for homes with good rental prospects, such as those close to city centres or university campuses, intend to restore the property to add to their rental portfolio. Landlords will need to follow guidelines when making a property fit for the purpose of renting.
Homebuyers looking for an affordable property in a sought-after area, where well-presented and recently refurbished homes in a particular school catchment area or within a prestigious postcode are outside their budgets.

As a seller, you can list your property, agree with the auctioneer on the reserve and guide prices you set and leave them to manage the marketing and legal packs all the way through to exchange of contracts.

What are your buyers looking for? A Checklist for Selling Your Property

So how do we know whether your property is attractive in the eyes of a buyer? Remember, it’s imperative to look past the existing condition of your property. Here is what buyers are really after:

A great location: In many cases, the location is as meaningful as the property itself. For example, a home that needs restoration or with structural defects may invite competitive bidding and achieve far above the reserve where it is in a postcode or area that is an excellent development opportunity. Is your house located in a desirable location?
A high yield investment opportunity: Many auction buyers are investors looking for properties that can generate a return on their investment. They seek properties with potential for rental income, future appreciation, or opportunities for renovation and resale. Once your property is refurbished, can the investor sell the property for more than invested?

A unique property: Auctions can feature a diverse range of properties, including unique or unconventional ones that may not be easily found on the traditional market. Do you have a unique property? Buyers interested in distinctive or niche properties may participate in auctions to find those specific opportunities.

A quick transaction: Auction buyers often value the speed and efficiency of the auction process. They may be motivated by the ability to secure a property swiftly without going through lengthy negotiations. Are you prepared to sell your property quickly?

How to Price a Property in Need of Refurbishment for Sale

Pricing can be complex and depends on myriad factors, including the location, structural condition, size, age, occupancy history, and the estimated costs of repairs a successful buyer would need to invest to bring the property to good condition.

Auctioneers can assist, drawing on years of experience managing auctions, helping sellers set guide and reserve prices, and dealing with enquiries and proxy bids from all registered bidders.

The reserve is the minimum agreed sale price and is not disclosed prior to the auction, whereas the guide price acts as a starting point or an indication to a buyer of what the auctioneer expects the property to sell for.

Setting your pricing carefully is advantageous since an attractive, reasonable price is more likely to achieve an auction sale, and the more bidders who are interested in a lot, the higher the bids are likely to climb.

Before the property auction, the auctioneer handles these negotiations on your behalf and will agree to a reserve and guide price before the auction goes live. This process means you will never sell a property, in any condition, for less than the reserve you have agreed to. , which is the minimum you are prepared to sell for.

Sell your property with Clive Emson

If you would like further information or guidance about selling a house in need of repair or to discuss the suitability of your property for an auction sale, please get in touch with Clive Emson at any time. We’re experienced in selling properties of all conditions and have a pool of ‘hungry’ buyers ready to make a purchase.

If you would like to know how much your property is likely to sell for at auction, get a free appraisal here.

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Clive Emson Auctioneers

Clive Emson Auctioneers was founded in 1989 to supply a high profile auctioneering facility to corporate and independent estate agents, private clients and statutory bodies. Purchase or Sell land and property with one of the UKs leading property auctioneers.

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