My mom passed six months ago and left me her house in Connecticut. I live in Texas. The house needs repairs and I'm trying to figure out the smartest financial decision.
The house is probably worth around $200k based on Zillow but needs a new roof, HVAC, and cosmetic work. A realtor said I'd need to put in $25k-35k in repairs before listing. Plus there's 6% commission, monthly holding costs for mortgage/taxes/insurance while it sits on the market, and they said it could take 4-6 months to sell.
A local cash buyer offered $160k as-is with a 3-week close. No repairs, no fees.
When I run the math, the traditional sale might net $150k-160k after all costs and fees, which is basically the same as the cash offer. But I feel like I'm missing something. Is there a financial factor I'm not considering? Should I be thinking about this differently?
I've never dealt with inherited property before and want to make sure I'm not making a mistake.
Inherited house out of state, help me calculate if cash offer makes sense vs traditional sale
byu/Abril-prieto-cevallo inpersonalfinance
Posted by Abril-prieto-cevallo
15 Comments
Honestly the cash offer sounds pretty solid given your situation. You’re forgetting about the stress factor and time value of money – that $160k in your pocket in 3 weeks vs potentially 6+ months of dealing with contractors, showings, and carrying costs from out of state is worth something too
The main thing you might be missing is getting a second opinion on repair costs, some realtors inflate those numbers
How were you made aware of the local cash buyer? Was it by the same agent who told you all the negatives about selling it?
Just FYI cash buyers who want to delay closing are often NOT cash buyers, they are financing it and need to buy time for the financing to come though. They will often delay again and again. You end up wasting time and still selling for a lower price. It’s a common tactic flippers use.
The cash offer sounds pretty good based on the numbers you list.
That said, I live in CT and didn’t know $200K houses (even ones in bad shape) were still a thing. I certainly don’t know of any.
What did the realtor say they’d expect to list it for after you did the repairs? $200K? If so, take the cash offer and run, but if you haven’t asked that question yet, be sure you do.
Sign that offer yesterday. Be done with it.
Take the cash offer. Repairs will be like peeling back an onion.
I would make sure to have a real estate lawyer review their offer, and use a reputable escrow service. I would not cut corners, in case their offer is shady.
BTW commission doesn’t have to be 6%, it’s negotiable.
Counter their offer to close in 5 days. If it’s truly cash no big deal for them. If not, you’ll know.
I would make sure at least three realtors look at your home and let you know what you could sell it for as is and what you could sell it for with some small improvement and what you could get with larger improvements and then decide. I would not make this decision with only one realtors opinion.
Get a better realtor who will list the house as a fixer-upper. You’ll make more money than selling to a “cash buyer” and you won’t need to make those repairs.
IOW dump the agent who told you to make those repairs.
You can still list and get cash offers, or go take this same cash offer after listing.
List the house. Include in the agreement with the agent if it sells to this first cash buyer – they don’t get commission. You sourced that buyer, this incentivizes them to go find better.
I really don’t know bout I think you need to talk to other people. This is Connecticut, 200 grand is likely less than land value. I’m in Tampa Florida where million dollar properties are tear downs in the right location.
I have sold maybe 6-8 properties for estates in the last two years. Each and every one has been sold “entirely as is” with the aid of a realtor. None of the realtors have told me I needed to put money into it to sell it.
The 6% will be higher if you put your money into it. I wonder if that influences the recommendation.
Houses are selling needing repairs. So another realtor with 90 day listing might be a possibility. If you take a cash offer you want 5k nonrefundable deposit. Then you will now if they are really a cash buyer.
If all of the information you gave us is true, then the cash offer seems good. I would be very skeptical that all of the information you shared is actually true. You need second opinions and to consider where the sources of your initial information came from.