Should You Fix Up Your Home or Try to Sell It As Is?
You're ready to list your home for sale...then you look around. Maybe you've spent time and money updating the exterior of the house but the interior is still in serious need of attention. Maybe there's dry rot, or maybe it's just outdated.
What to do? Should you spend more time and money on fixing it up or just try to sell it as is?
This is one of those questions where the answer depends on variables. What's the condition of competing homes for sale? Is it a hot, cold, or neutral real estate market? What's the likelihood of a return on your investment?
Many sellers put way too much money into fixing up their homes before listing them for sale. They repair flaws that a buyer might never notice or just won't pay extra for.
Selling a Home in "As Is" Condition
Let's say that the property in question needs a lot of work. It has holes in the walls all the way to the exterior and urine-soaked wood floors. Much of the electrical system doesn't work and the bathroom tub has fallen through the joists. All the faucets leak.
This is not a home that can be easily or economically fixed. A coat of paint won't help. In this case, you might want to just price the house low enough to attract multiple offers. You can probably anticipate that only contractors and flippers will make offers.
Do Homebuyers Want Fixer-Uppers or Fixed Up Homes?
Some homebuyers say they want to buy fixer-upper homes but they're generally looking for those that require only light cosmetic repairs. Buyers who gravitate toward fixer-uppers are those who either don't qualify to buy a more expensive home or they want to make a profit by fixing up the home themselves.
Most "fixer" buyers are willing to do simple repairs such as paint the walls, put in new carpeting, or replace light fixtures. They don't want to rebuild a foundation or move walls.
Fixer-upper buyers will discount the price of the home to allow for the repairs then discount it a bit more for the inconvenience. Say a home is worth $100,000 fixed up but it needs a new roof. A new roof might be expected to cost $10,000. A buyer most likely will not offer $90,000 for this home. She could buy an identical home with a new roof for $100,000 and not have the hassle.
A buyer for this type of home might offer $75,000 or even less. The seller would be smarter to pay for a new roof and sell the home for $100,000 in this scenario.
And keep in mind that many buyers will not buy a home that needs a new roof. They worry that the work involved will cost more than what they anticipate. Perhaps replacing the roof would involve tearing off the sheathing and repairing rafters which could add to the cost.
Most buyers want a home that's in move-in condition. You can limit the number of buyers who might be attracted to your home by not making repairs.
Before Fixing Up Your Home
Smart sellers will weigh the cost of the proposed improvements against the home's market value after the repairs or upgrades are completed. Such an improvement might not be warranted if an upgrade won't return the investment. Before you decide to lift the roof and install skylights in the master suite, realize that kitchens and baths carry the highest return.
You might also want to take an afternoon off to tour other homes in the neighborhood of sale with your agent. Note the condition and amenities in these homes.
This doesn't mean that you have to buy designer appliances and tear out the cabinets but a minor kitchen remodel might be a good investment. Sometimes simply painting oak cabinets a darker color and installing updated hardware can give your kitchen an all-new look.
Where to Start
Make a list of everything that's defective, broken, or worn out. Buyers might wonder what else in the home has been neglected if they spot problems or malfunctioning systems as they tour your home.
Minimum improvements you might want to consider making before selling your home include patching holes and cracks in the walls and ceilings and fixing broken appliances and HVAC systems. Repair leaky faucets.
Replace broken window glass and repair the roof if necessary. Change any dated light fixtures or ceiling fans. Fix code violations—any serious buyer is going to have the home inspected.
Replace worn or stained carpeting. Repaint dark or marred walls with neutral paint—not white. Replace old drapes and window coverings.
Keep in mind that empty homes don't show as well as furnished rooms, but battered furniture can detract from your home's appeal. Consider upgrading your furniture if it's in bad shape. You can always take it with you when you go.
The Effect of the Market
If your real estate market is extremely hot—it's a seller's market—you can usually get away with fewer fix-ups before selling. But a home that needs repairs will still deliver a lower price in any market. Buyers might not even bother to look at a home that needs work in slow markets like a buyer's market unless it's an REO.
Your agent has her thumb on the market, so ask her for advice. Give us a call before you begin renovations. Let us help you determine what's best for you. Call us at 504-754-0059 or email at [email protected]
At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.