Can I Fix My Las Vegas House Before Selling and Pay for the Repairs at Closing?

By Mike Tchobanian, Broker and Owner, Vegas Capital Realty | The Tchobanian Group

Call Mike at 702-530-5844

The honest answer: it depends on the job

Every seller with a house that needs work asks the same thing. "Can my Realtor handle the repairs before listing and have the contractor paid at closing?"

Here is the truth. Not every contractor is willing to do that. I have a couple of contractors I have worked with for years who will, depending on the situation, the size of the job, the price, and how long it will take for them to get paid. The longer they wait, the more likely they are to charge an extra fee for waiting.

What usually happens is a partial payment. The contractor takes half up front, does the work, and waits for the other half until the house closes. Most sellers can manage half. That is a better promise than "nothing up front," which is what the fix and flip companies advertise, and it is a promise I can keep.

It is case by case. Paint, flooring, and cleanup on a house that is otherwise fine is an easy yes. A full kitchen and bathroom remodel is a longer conversation, and the contractor will want more of it up front.

First question: does the house actually need the work?

Before anyone talks about contractors, I walk the house.

If it is in good condition, you may be able to sell it as is at full market price. Spending money on a house that does not need it is wasted money, and I will tell you that.

If it does need work, most of the time the seller makes more money by fixing it up and bringing it to a condition that is attractive to buyers. Two reasons:

1. A fixed up house sells to the whole market. When it goes on the MLS in good shape, every buyer out there can buy it, including the buyers who pay the most. A house that needs work mostly sells to one cash buyer, and one cash buyer pays one cash buyer's price.
2. The gap is often bigger than the repair bill. A house worth $650,000 fixed up that needs $40,000 of work will not automatically sell as is for $610,000. Buyers often want a bigger discount than the repair bill, to cover the work, the risk, and the hassle. Not every repair pays for itself, though, which is why I compare both numbers before recommending anything.

When selling as is is the right call anyway

It depends on the seller and what is best for them, not just the math.

Some sellers need to sell and move on with their life. They do not want to wait six or eight weeks for repairs and then another month or two on the market. For them, taking less money and putting the whole thing behind them is worth it. That is a legitimate choice, and I will help them make it.

If that is you, say so. I will give you both numbers, what the house sells for as is and what it sells for fixed up, and you decide. Here is how I come up with those two numbers.

Who runs the job

That is up to you. Some sellers want to hire their own people and handle it themselves. That is fine.

A lot of my sellers are out of town, or just do not want to deal with it. In that case I coordinate it. I bring in contractors we trust and have worked with before, I get the bids, and I help with the scheduling and the communication so you do not have to be here. You approve the work and the payment terms directly with the contractor.

One thing to know. Nevada law lets a real estate broker schedule repairs for a client only on smaller work, no more than $10,000 total per property during the listing and with no building permit required, and I cannot be paid extra for it (NRS 624.031). On a bigger job, like a kitchen or a roof, I introduce you to a licensed contractor, you contract with them directly, and they run the work and pull the permits.

What happens if the house does not sell

The contractor still gets paid. That is why the contractor has the seller sign a written payment agreement, what most people call an IOU, before the work starts. It should spell out the total cost, what is paid up front, the balance owed, when it is due, any fee for waiting, and what happens if the house does not sell. If the sale falls through, or you change your mind about selling, the money is still owed. That protects the contractor, and it is only fair. Read it before you sign it, and know the number.

Payment at closing is not automatic. When the contractor and the escrow company agree to the arrangement in writing, the balance can be paid from your proceeds at closing. If the sale does not close, you still owe it under the written agreement. Get a lien release from the contractor once they are paid.

How this works with me

• I walk the house first and tell you what needs to be done and what does not.
• I give you an as is price and a fixed up price so you can see the difference in writing.
• If the work makes sense, we get bids from contractors we trust. Where it fits, they take part up front and the rest at closing.
• You sign a written payment agreement with the contractor, so everyone knows where they stand. If the contractor and the escrow company agree, the balance can be paid from your proceeds at closing.
• On smaller work, I coordinate the bids and the scheduling if you are out of town or do not want to deal with it. On bigger jobs, I introduce you to a licensed contractor who runs the work.
• Then we list it to the whole market, not to one investor.

Frequently asked questions

Can I sell my Las Vegas house and pay for the repairs out of the proceeds?
Sometimes. Some contractors will take half up front and wait for the rest until closing, usually on smaller jobs and often with a fee for waiting. It is case by case.

Is it worth fixing up my house before I sell it?
If the house is in good condition, no. If it needs work, usually yes, because a fixed up house draws far more buyers than a house that needs significant repairs, and usually a higher price. But if you need to sell fast and move on, selling as is can still be the right choice.

Who pays the contractor if my house does not sell?
You do. The contractor will have you sign a written payment agreement for the balance before starting, so the money is owed whether the house sells or not.

Do I have to manage the repairs myself?
Not the small ones. If you are out of town or do not want to deal with it, I bring in contractors we trust and coordinate the bids and scheduling. On bigger jobs that need permits, I introduce you to a licensed contractor, you contract with them directly, and they manage the work.

Should I take a cash offer instead of fixing the house?
Get both numbers first. Here is how a cash offer compares to listing with an agent.

Have a house in Las Vegas or Henderson that needs work?

Call me before you spend a dollar on it. I will walk the house, tell you what is worth doing and what is not, and give you both numbers.

Call Mike at 702-530-5844

Or email mike@vegascapital.com.

Related: Should I sell my Las Vegas house as is or fix it up first? | What does it cost to sell a house in Las Vegas?

This article provides general real estate information, not legal or financial advice. Contractor payment terms vary by job and are agreed in writing between you and the contractor. Nevada's rules on a real estate licensee scheduling repairs are in NRS 624.031.