All Financial Wisdom
Should I fix my house or try to sell it like this?
I want to share with you a recent question I was asked, and offer a few words of my own financial wisdom (see what I did there 😉 as well.
Question: I have spent a lot of time and money remodeling the exterior of my house and the main bathroom. However, the rest of my 22-year-old house needs attention inside, the upstairs bathroom has damaged parts and is outdated. The kitchen is also outdated. We’ve put new things in it, but cupboards and cabinets probably need replacing. Should I fix my house or try to sell it like this?
Answer: This is one of those questions whose answer depends on variables such as competing inventory conditions, whether there is a successful, bad or neutral real estate market and the probability that the investment will be cushioned.
Sell a house in the conditions that this
For example, someone had to sell their house immediately. It was obvious that the house needed repairs.
The house seemed uninhabitable. It had holes in the wall that led to the outside and the wooden floors were soaked with urine; Most of the electrical installations were not working, the bathtub had fallen and broken one of the beams. All the faucets dripped, and in one room I found a pile of rats in the middle of the floor.
This was not a house that could be easily fixed. Not even a coat of paint would have helped sell this place. We put a price low enough to attract multiple offers so it can be quickly sold in the market. Only contractors and home resellers made offers for this home.
Do homebuyers want tidy houses or homes they can fix?
Some buyers want to buy a home that they can fix, but generally these buyers want a home that needs some light fixes. Buyers who want a property that needs fixes are those who do not qualify to buy a more expensive home, or those who want to make a profit by fixing the house themselves and then selling it.
I have not yet met someone who buys a house for the first time and says “Give me a house that I can renovate down to the floor.” Most buyers who want a home to fix, are willing to make simple repairs like painting the wall, putting on new carpets or replacing the lighting. Typically, they do not want to rebuild the house from its foundations or move walls.
Home buyers who need repairs will discount the sale price of the home to allow repairs and also for the inconvenience. Let’s say, a house is worth $100,000 if it’s repaired, but it needs a new roof. A new roof can cost $10,000. A buyer is probably going to offer $90,000 for this house. Many buyers would not acquire a home that needs a new roof. They would worry that the work involved in repairing the house may cost more than they anticipate. Perhaps, replacing the roof would involve repairing the beams, that could add an extra cost. Most buyers want a home in which they can move directly. By not making repairs, you are limiting the number of buyers who may be attracted to your home.
Before you repair your home
Smart buyers compare the cost of a home to repair along with the value of the fixes, with the cost of a home already repaired. If a repair will not cause the investment to be returned, that improvement may not be guaranteed. Before you decide to raise the roof and install skylights in the master suite, remember that repairs in kitchens and bathrooms are the ones that return more money.
Before deciding to make specific repairs, take an afternoon off to see the other houses in the neighborhood. Note the conditions and amenities in those houses. Compare these homes to yours. If, for example, most market houses have improved kitchens, you should concentrate on fixing the kitchen. This does not mean you have to buy designer kitchen items or pull down the cabinets. But a minimal remodeling of the kitchen can be a good investment. Sometimes a fresh coat of paint on the cabinets and new decorations can give the kitchen a new look.
Make a list of everything that is defective, broken or worn. Here are 10 minimum improvements you can make before selling your home:
-Patch all holes and cracks in the walls and ceilings.
-Fixes all broken applications and HVAC systems.
-Repair the dripping faucets.
-Replace worn carpets
-Re paints dark or damaged walls with neutral paint (not white)
-Replace broken windows
-Repare the ceiling
-Change outdated lights / ceiling fans
-Replace old linens / curtains
-Fixes code violations
If your real estate market is extremely successful – a seller’s market – you can make some minor fixes before you sell, however, a home that needs major repairs will have a low price. In slow markets-a buyer’s market-buyers may not even see homes that need work. Will the increase in value be enough to justify the cost? What do similar houses look like? Is it a seller or buyer’s market? Keep these factors in mind when deciding whether you should make repairs to your home. Good luck