Let’s say that you are preparing to sell your house and after hiring a home inspector to do the due diligence, you’re told several things had been damaged over time. It is highly unlikely that you have money saved up to carry out these repairs and you know not making them will devalue your property – what do you do?
If the repair damages are low cost or nonessential, you can do one of the following:
a.) Make the repairs
Fixing your home with the help of professionals is an excellent idea if your repairs are minimal and affordable. Just make sure you only go for the value-adding repairs like electricity, plumbing, and bathroom improvements.
After making the repairs, do not forget to disclose them to the buyer during the sale process – doing this will save you from legal troubles after selling the house.
b.) Offer credit to the buyer
If the presale home repairs are mostly cosmetic and non-essential, you can offer credit to your buyer like 34% of sellers do. This particular option is great because it will allow buyers to decide how they want the repair done.
Note that you must contact a real estate agent before offering credit to your buyer. It is the agent’s duty to negotiate the terms of the contract.
If the above solutions won’t work for you, you need to get more money for your house repairs. So, how can the average homeowner get money to repair and renovate their home before sale?
A loan is a good source of cash for presale home repairs. With the average cost of renovating a home estimated to be between $19,785 – $73,198, this can provide you with fast access to the large amount of money you need for renovations and upgrades.
Additionally, a loan can help you meet up with future money-demanding plans like moving to a new place, furnishing your new home, etc.
Banks, online lenders, and credit unions are great places to get home repair loans. However, their interest rates can be as high as 36%. It would be wise not to go for this option if you are not sure you will be able to pay back in the future.
2. Credit card
Using a credit card is one of the first options homeowners consider when they need money to make pre-sale home repairs. All you need to do is take up a loan with your credit card company to meet your repair needs and pay it back over time.
But as convenient as it might seem, taking up large renovation expenses with your credit card can hurt your credit records. Additionally, the interest rate will rise if you cannot pay your credit balance before the stipulated date. In the long run, it may not always be the ideal solution as the interest rate can reach as high as 16%.
To avoid all these problems, you should consider taking up a new credit card with a low-interest rate to apply for funds. This will allow you to make repairs to your home with minimal interest rates.
3. Government grants and loans
Another option you should consider for presale home repairs is government grants or loans.
A grant is a fund the government gives you for a specific purpose, which in this case is to improve your home. You are not required to pay back the grant. To qualify for most home grants, you must prove that the home repairs are necessary and that you cannot afford the repairs.
You can also apply for government loans like the HUD Title 1 property improvement loan. This type of loan will give you access to more than $20,000. However, as with the grants, you can only use this money for important repairs and renovations. That means that you can’t use this loan to do things like getting a Jacuzzi or building a swimming pool.
Getting a home equity line of credit (HELOC) is often the best way to pay for your presale home repairs. It offers very low interest rates because your home already secures the debt. A HELOC has an average interest rate of about 5.51% – quite low when compared with a personal loan. The loan is based on your home value.
You can apply for HELOC as long as the amount you owe on the mortgage is less than your home value, and the more equity you have in the house, the better.
5. Insurance claims
Home insurance policies almost always contain compensation in case of damages to the home. You can exploit this to gain money to make the necessary presale home repairs.
For example, if a home insurance policy can contain claims to remuneration in the event of a natural disaster or an accident, you can simply fill a claim if any one of them is the reason for the damage in your home.
Therefore, read your policy carefully to understand what types of damage are covered and what types of damage are not so you won’t waste your time.
Let Bost Redevelopment help you sell your home
Making the necessary presale home repairs is essential to getting the best value for your property. The above options are a good way to start if you do not have the money to make your home repairs before the sale. However, you should know that there are many intricacies to each option. For you to choose the best one, you need an expert guide.
This is where we come in.
At Bost Redevelopment, we are experts at handling every home selling problem you may be facing. We would use our marketing expertise to ensure you get the best buyer for your home at the maximum value possible.
LIMITED OFFER! You get a 5-day cruise vacation for 2 if we successfully help you sell your house. So, leave us a message below with your contact information and we will get right back to you as quickly as possible.