No matter what the condition of your house, if you need to SELL, at some point you’re going to have to ask yourself: “Should I Sell my House As Is or fix it”?
There are a lot of factors that go into that decision and most of the time a typical homeowner does not have the expertise to make that decision alone. In fact, most homeowners in this situation rely on the advise from real estate professionals ranging from real estate agents to contractors.
The problem is that each of those professionals has a vested interest in having you spend money to fix the house because it is the only way for them to remain involved and make money.
Success to a real estate agent is selling the house and collecting a commission. Success to a contractor is having you spend money to fix the house. Either way you are the only one that has anything at risk.
Success to a homeowner is to make the right choices to be able to sell the house without draining their available capital to fix the house and at the same time maximize the profits that end up in their pocket.
Do I have enough money to really fix the house?
Most homeowners should focus on a bigger question: Do I have enough money to really fix the house and get top dollar?
In real estate, the law of diminishing returns is a reality. At some point you can easily spend beyond what the market will yield in sales price for a house in your neighborhood, at its age and condition and the real repairs and updates that are needed.
Most people don’t realize that an average 1500 square foot house in average condition takes $30,000.00 to $70,000.00 to meaningfully fix and update. Here is the catch… unless you are going to do most of the work yourself, you will rarely come out ahead. The biggest obstacle to recouping the cost is in making the right choices as to the specific repairs and updates that are meaningful to achieve a return on investment.
Shoddy Work Does Not Count
I have walked into many houses that have been “repaired and updated” with patching compound and paint, covering the cracks in the walls and ceilings from the foundation settling. The foundation issues were never addressed. I have seen kitchen updates with new granite and tile on 40 year old cabinets. I have seen old wood and aluminum framed windows with the panes replaced rather than new windows installed. These aren’t meaningful repairs or updates and they do not add value to a house.
Even though minor repairs can cost a lot of money, the homeowner should have addressed the root cause of the problems rather than just applying cosmetic band-aids. Cutting corners or hiding problems are not a way to increase the value of your home.
Today’s Buyers Want Move In Ready
Buyers in today’s real estate market are tire kickers and they want to buy houses that are move in ready. They are not the Do it your self buyers of the past and Banks and Mortgage lenders are also of the mindset that they are not going to lend money unless the home can meet strict livability standards subject to multiple inspections. Gone are the days where buyers look at a house and decide that they will do the work themselves. Gone are the days where even conventional lenders will approve such loans.
So, if you have got $30,000.00 to $50,000.00 lying around and you want to get top dollar for your house, you need to make the correct choices but be aware that if spending that money is just a dollar for dollar exchange in what you could sell your house for without fixing it, you may be better off selling the house As Is.
You are going to save the time, the cost of repairs, the time, the inconvenience and the stress on your family. Remodels are notorious for their inconspicuous surprises that create budget overruns and of course the aggravation of hiring and managing a contractor and his/her work. The big question is: Is it worth it?
What if you could just sell the house As Is minus the cost of repairs and updates?
When evaluating your choices, special consideration regarding the actual cost of the most basic updates and repairs, if you are not going to pocket at least another 20% above and beyond the cost of those repairs, your efforts may actually cost you more money in the long run.
When you consider the real cost associated with remodeling a house that needs repairs you realize the path to a sale is long and treacherous and fraught with pitfalls and budget overruns that no one tells you about, including your real estate agent or contractor.
Other Factors Including Holding Cost:
In addition you need to ask yourself how long you have to wait for the house to sell? You really need to asses the condition of the market and your likely hood to finish quickly. If you sit back and think about it. you have other cost as well including those recurring monthly bills that will come regardless of your progress. You begin to realize that the cost to fix also includes your holding cost until you are able to sell.
So what are the holding Cost? Holding are simply an cost that you pay ongoing and can include interest on your mortgage and other loans to fix and update your house. Impound accounts for insurance and property taxes and so on. All of them need to be factored into the cost of sales. The biggest cost may actually end up being the time it takes until the house sells.
My name is Peter Westbrook and I am a local real estate investor. We buy houses in Sacramento, Stockton and Modesto and if you want to sell your house fast with out the need to make repairs, clean and without any hidden cost, you may want to talk to me first. My company is Westbrook Real Estate Investments and has been buying house for the past 10 years and I may be able to help you. Call me at 209-481-7780.