I'm currently trying to help my parents get out of their house. One had a heart attack, the other had cancer and they are ready to retire and downsize. They have a 3,900 sq ft, 4-sided brick house with a finished basement and in-ground pool in a desirable school district.
However, the house is in need of major repairs. The 500-750 sq ft deck needs to be rebuilt, the pool needs to be re-plastered, the house needs all new flooring and paint, new gutters and some exterior trim work. The house was built in 1983 and neither of the kitchen nor any of the bathrooms has been updated.
Their realtor has suggested it would be at least $50-60,000 to make the suggested repairs (no updates to kitchen or bathrooms), which seems on par with our estimates, maybe even a little low.
Comps in the neighborhood have been $330-380k this calendar year, but all of those houses have been updated.
My dad retires mid-January, and my parents would like to be moved by mid-February. If they don't move by mid-February, they will be unable to move until June due to issues beyond our control with my mother's job (which she isn't leaving). They already own a second home that is paid for that they will be moving into.
Here are the options on the table so far:
List with realtor: $50-60k in repairs, which will require my parents to take out a loan and cost time to complete. Suggested listing price $370-380k. We are having a difficult time believing they can get anywhere near that price based on the comps.
Sell to private investor: an investor recently purchased a house six stores down from them for $247k. It's about 800 square feet smaller, did not have a finished basement and no pool. We were hoping he would be interested in buying theirs somewhere between $275k and 300k based on the additional square footage and finished basement, because we knew the other house had been in worse shape. However, what we didn't know is that the investor bought that house for his own personal home and put more money into it than he would have for an investment. He has offered my parents $250k.
We Buy Ugly Houses: offered $235k
Open Door: $339,400 - 9.5% fee = $307,082 (but would still need to do the inspection to determine the reduction for repairs)
Offer Pad: $332,012 - 7.5% fee = $297,861 (but would still need to do the inspection to determine the reduction for repairs)
We still have two other private investors coming to look at the house.
My parents are aware their best chance at maximizing their money is doing the repairs and listing with the realtor. However, it requires them taking out a loan and will extend their timeline for getting out of the house, which obviously results in added costs for continuing to pay the mortgage, insurance, utilities, etc. We also think the realtor is being far too optimistic with their estimate based on the comps, although it should still net my parents more money.
I lean toward thinking they should let Open Door come do their inspection and find out how much they would ding them on the repairs. My parents would be happy to walk away at $275k, which gives room for Open Door to knock off a good chunk from their current offer. It would also allow them to get out on their February timeline, saving them additional mortgage, insurance and utility expenses. And it avoids having to take out a loan for repairs or go through the headache of getting estimates and having people in the house working.
I want to help them make the best decision possible. I'm a former real estate attorney who previously worked with investors on flips involving affordable housing and historic preservation tax credits, so I think I understand enough to be helpful. However, I'm wondering if I'm overlooking anything else we should be considering.
Thank you in advance for any advice!
