Rules of Thumb

Veteran Realtors know that $1 in deferred maintenance subtracts much more than that from a home’s sales price.

The ratio can be 3:1, 4:1 or even higher.

While the exact amount is house and buyer-specific, at least anecdotally, there seem to be two factors that widen the discount.

One. Price Point.

First-time Buyers are notoriously cash-poor.

So, the prospect of tackling $5k ” or $25k ” in immediate repairs might not just be a negative, it could very well be a deal breaker.

As a result, deferred maintenance on smaller, more modestly-priced homes can loom larger.

Conversely, many first-time Buyers seem especially willing to pay a premium for homes in mint or move-in condition.

Two. Absolute amount.

Plenty of Buyers are fine with a short list of deferred maintenance.

However, once the list grows from a few items to several major “Projects,” the pool of Buyers with the willingness and resources to tackle said items can shrink dramatically.

Fewer Buyers = weaker demand = lower price.

Which is why savvy Sellers are well-advised to whittle down the repairs list as best they can.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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