Sell or Stay and Pay for Repairs?

Original Post Date: August 12, 2011

By: June Fletcher

Q. I bought a three-bedroom house in 1998. It needs work, but because I am 60 years old and on disability, I can’t pay for it. I’d like to move to a condo or apartment with less upkeep. The house is worth about $60,000 now, and I have $9,000 left on the mortgage, which will be paid off in two-and-a-half years. Can I get my equity out? Besides selling, do you have any other suggestions?

–Shreveport. La.

A. If you sold for $60,000, you’d have to pay the lender the $9,000 you still owe, plus closing costs, which will include a real estate commission, which typically runs from 5% to 7% of the sales price (though this is negotiable), as well as title insurance, taxes and various fees.

Under Louisiana law, you would also have to complete a property disclosure statement that includes any problems you know about with respect to the property, including the plumbing, sewer, drainage, foundation, heating, air-conditioning and roof. That doesn’t mean that you can’t put your house on the market as-is, but you can expect that the buyer will have a property inspection done and will try to negotiate either a lower price or a credit to cover the cost of the repairs.

Before you sell, interview three real estate agents who have had success selling homes in your area and ask them to do a comparative market analysis of your home. They should all be able to give you an estimate of what you should expect to net from the sale. Be sure to ask if they know of any investors who are buying in your area. Although you might get a discounted price, most investors don’t shy away from homes that need work—they make their living fixing up homes and selling them for a profit.

To make your home more attractive to conventional buyers, I also suggest that you offer a home warranty to buyers that will cover the cost of the repair or replacement of major systems; although it will cost between $300 and $600, this is less than it will likely cost to do the repairs before selling. Generally, the cost for the warranty is taken out of the proceeds at the closing, so you won’t have to pay for it out-of-pocket.

However, as I’m sure you’re aware, the real estate market remains at or near the bottom. So you can’t expect to sell for top dollar right now. Also, keep in mind that if you buy a condo, you will have to budget for association fees, which usually go up as the facilities age. Similarly, you can expect apartment rents to rise over time.

As you are nearing the end of your mortgage, you should at least consider if it makes sense for you to wait to sell until the market improves. If the only reason that you want to move now is because you can’t afford to make repairs, look into programs that provide free or low-cost home repairs to those who meet certain income limits. Check out for a list of organizations that can help.