The Ugly House Market and Reasons Why Your House is an "Ugly House"

HomeReal Estate

  • Author Jason Grote
  • Published November 28, 2011
  • Word count 652

The biggest catch phrase in real estate investor history, "We Buy Ugly Houses," has become a household name. With some money spent on advertising and a huge franchising effort that has virtually spanned the entire U.S., the largest company in this niche of investing has branded and trademarked this catchy phrase. Everywhere you go, you see those silly little bandit signs yelling, "Sell House for Cash!" or "Sell Your Home Fast!" As a result, the "We Buy Ugly Houses" niche of Real Estate Investing has become huge and has introduced new opportunities to sellers of fixer uppers. Now, you might be asking, "Do I have an ugly house?" or, "What makes a house an ‘ugly house’?" Good questions!

If you’re thinking to yourself: "Who really cares about the stain in the carpet that is now underneath the new couch?" or "Who cares if the house is two inches out of level from one end to the other?", you may have an ugly house. Most homeowners have an uncanny ability to overlook the multitude of issues concerning their homes. Many of these issues are known but many of these issues are actually unknown. Ignorance and overlooking known issues can create a blissful experience, but can also lead to an "ugly house." Most homeowners may think "As long as quality of life is not compromised, who cares?" Well the answer is no one really, until you want to sell it…

When you go to sell your home, these issues that were once faded far into the background, have come to the forefront and have now presented themselves in your and your potential buyers’ faces! To be frank, most people are extremely suspicious when it comes to buying big ticket items like a house. They will get out the white gloves or even hire a 3rd Party Inspector! Every little problem and even some additional "perceived" problems end up becoming exposed and discussed. Additionally, many issues such as: a sinking foundation, an A/C unit in disrepair, an old roof, no flooring, plumbing issues, and more could actually become huge stumbling blocks for retail buyers.

But what actually qualifies as an ugly house? Simply put, it is a house that is not in "retail" condition or a house that is limited to the "investor" or "fixer-upper" buyer pool, which is unfortunately a markedly smaller buyer pool than the "retail" buyer pool. In actuality, there would be many more "retail" buyers in this pool, if it weren’t for strict lender requirements. But, most "retail" buyers use a bank loan to purchase the property, so they are subject to the lender’s rules. Most conventional, FHA, VA, and other common loans will require the house to be in a "livable" condition. For example, FHA is looking for the 3 S’s: Safety, Security, & Soundness. They even send out a 2nd appraiser to check that these requirements have been met. Although the buyer may not care about the condition of the home, because they want a good deal and then want to fix it themselves, they are subject to lender rules. This seriously shrinks the amount of buyers for a home that needs repairs.

However, don’t be discouraged if you have an ugly house. It is only a matter of money. If you are able to spend some money to bring the home to a retail condition, you will greatly enlarge the number of prospects for your home on the open market and potentially sell your home fast. Yet, as an investor, I understand that a distressed property is usually just a symptom of personal issues within a family or an individual’s life. If you don’t have the time, energy or finances to bring your property to retail condition, don’t fret, the "We buy houses" niche is booming right now and many investors are out there looking to buy your "ugly house."

Jason Grote, co-founder of, has been real estate investing for 10 years. Jason a full-time rehabber and marketing expert in the industry has gained the expertise to sell a home fast and can also help owners looking to sell a house for cash. Because of his struggle to enter the "flipping business," Jason enjoys working with and encouraging beginning real estate investors.

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