To Fix Up, or Sell “As Is”

Many times in speaking with potential sellers I get this question. “Should I fix up the house or just sell it As Is”? The answer to this question is found with a little research. The answers to the following questions will help in determining your answer:

• What work needs to be done?
• What is the condition of my house as compared to the others for sale around me?
• What is the cost of these repairs/upgrades?
• What is the “Return on my Investment”?

Selling a Home in As Is Condition
For example, I received a call from a potential seller that wanted to sell a rental property immediately. To say it needed work was an understatement.

The home appeared inhabitable. It had holes in the walls, the exterior doors were kicked in, almost every window was broken, most of the electrical didn't work and the bathroom floor was about to fall in.

This was not a home that could be easily fixed up. Not even a coat of paint would have helped sell this place. We priced it low enough to attract investors. Only contractors and flippers would be interested in this home.

Do Home Buyers Want Fixers or Fixed Up Homes?
Some home buyers want to buy a fixer upper home, but generally these buyers want a home that will require light cosmetic repairs. Buyers who gravitate toward fixers are those who either don't qualify to buy a more expensive home or those who want to make a profit by fixing the home themselves.

I've yet to meet a novice first-time home buyer who says, "Give me a home I can tear down to the studs." Most fixer buyers are willing to do simple repairs such as paint the walls, put in new carpeting or replace light fixtures. They typically 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 and, for the inconvenience, a bit more. Say, a home is worth $100,000 fixed up, but it needs a new roof. A new roof might cost $10,000. A buyer most likely will not offer $90,000 for this home. Otherwise, they 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. In this scenario, a seller would be smarter to pay for a new roof and sell the home for $100,000.

Moreover, many buyers will not buy a home that needs a new roof. They will worry the work involved will cost more than what they anticipated. 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 is in move-in condition. By not making repairs, you will limit the number of buyers who may be attracted to your home.

Before Fixing Up Your Home
Smart sellers will weigh the cost of proposed improvements against the home's market value after the repairs or upgrades are completed. If an upgrade won't return the investment, such an improvement might not be warranted. Before you decide to lift the roof and install skylights in the master suite, realize that kitchens and baths carry the highest return.

Before deciding to make specific repairs before resale, take an afternoon off to tour other homes in the neighborhood. Note the condition and amenities in those homes. Compare these homes to yours. If, for example, most of the homes on the market have upgraded kitchens, you should concentrate on fixing the kitchen.

This doesn't mean you need to buy designer appliances and tear out the cabinets. But a minor kitchen remodel might be a good investment. Sometimes, a fresh coat of paint on the cabinets and new hardware can give your kitchen an all-new look.

Make a list of everything that is defective, broken or worn out. If buyers spot problems or malfunctioning systems, they might wonder what else in the home has been neglected.

Here are 10 minimum improvements to make before selling your home:

• Patch all holes and cracks in walls and ceilings.
• Fix all broken appliances and HVAC systems.
• Repair leaky faucets.
• Replace worn carpeting.
• Repaint dark or marred walls with neutral paint (not white).
• Replace broken windows.
• Repair the roof.
• Change out dated light fixtures / ceiling fans.
• Replace old linens / window coverings.
• Fix code violations.

If your real estate market is extremely hot -- a seller's market -- you can get away with fewer fix-ups before selling; however, a home that needs repairs will still deliver a lower price. In slow markets -- a buyer's market -- buyers might not even look at a home that needs work, unless it's a foreclosure.

David C Recker, Associate Broker, Realtor ® licensed in North Carolina. Reach David at: 252-442-2687

Related Articles:
Responding To Low Appraisals
What’s The Best Thing You Can Do During Showings Of Your House?
Sellers: These Three Things Must Align

Visit my website, http://www.ncrealestateweb.com/, for more relevant information about the North Carolina Real Estate Market.

Copyright © 2009 By David C Recker, M3 Real Estate Guy. All Rights Reserved. *To Fix Up, or Sell “AS IS”*