Home Sellers: Fix It Up Or Sell It As Is?
Debating whether to fix up your home or sell it “as-is”? Choosing whether making repairs is worth the money can be difficult. In this article, we’ll go over the most important points so you can make an educated decision.
What does “as-is” mean?
Selling a home “as-is” means that you will not make any repairs to the home before you sell. The buyer knowingly buys the home in its current condition. Does your house have water damage, a bad roof, or foundation issues? In an as-is scenario, you wouldn’t need to make these repairs. However, the drawback is that you may need to sell your home below its estimated value.
Remember that as-is doesn’t mean “no inspection.” Potential buyers still have the right to a home inspection, and you must disclose any issues with the home.
Reasons to sell as-is
There are a few reasons why you may want to sell your home as-is, including:
- If your home maintenance has fallen to the wayside, or you lack the funds to complete all the needed repairs, it can be beneficial to sell your home as-is.
- If you want to sell your home quickly due to a new job relocation or for family issues, you may need to sell your home ASAP, making a list of repairs unrealistic to finish.
- If you inherit a house, selling as-is could be a good option. You may not know what issues the house has and do not want to get involved with repairs.
- It could also be that you need to sell your property and move quickly for either financial or personal reasons. Perhaps your property is close to being foreclosed upon, and you have no option but to sell it as-is to avoid foreclosure. Here you may have to give up some profit to escape the ramifications of foreclosure.
- You might have a significant tax debt. Unfortunately, there are cases when the IRS can put a lien on your property or if you owe too much in property or state taxes. If this does happen, there are circumstances in which you can sell your home as a means of paying off the debt and likely walk away with some cash leftover.
If you’re not faced with extenuating circumstances, however, deciding whether your home needs repairs before being listed can benefit from a more refined approach. It may be a good idea to equate your home to other properties in your neighborhood. Going to a few nearby open houses is an excellent way to compare your home to the local market. When every house in the area has a bathroom and kitchen remodel, you’ll have a harder time selling without putting comparable amounts of work into it.
Who wants to buy a home as-is?
You’ll still have a market interested in your home if you decide to sell as-is. House flippers are one such group often on the lookout for as-is properties. By buying a home below the market value they can make repairs and an eventual profit after reselling the house.
Since homes sold “as-is” are easier to renovate, you may find a buyer who wants a fixer-upper they can tailor and make their own. Just like investors, there are some mass market buyers willing to buy a home with “good bones” but a “down-at-the-heels” exterior if they can get at it at a bargain cost. After knocking out a wall here or there, updating the kitchen, maybe adding a bathroom, and sprucing up the outside they’ll have their own dream home – all for a tab for lower than had they built the house from the ground up.
Additionally, there may be individuals and families who normally couldn’t afford a home in the neighborhood your property exists in. Buying your “as-is” home is an investment opportunity for them as well, even if it’s a more personal affair.
The reality is that a property that isn’t in the best shape is an investment to whoever buys it. Even for someone who normally could afford a more put-together house, some may be interested in purchasing a house that could use some work because the affordability allows them to adjust and renovate the property to their personal taste.
How do you sell a home as-is?
If you’ve decided to sell your home, be sure to make it clear in the description of the home that it will be sold “as-is” and that repairs are not negotiable. Be sure to disclose any significant issues with the property such as mold, asbestos, foundation issues, or water damage. While you’re not required to disclose every scratch on the wall, you are legally required to identify any significant problems with the house. Work with your real estate agent to make sure your listing is transparent while remaining commercially viable.
If you’re selling a house “as-is,” how do you price it?
To assess how much your home will be worth it’s a good idea to weigh the cost of proposed improvements against the home’s market value after the repairs or upgrades would be completed. If you find that an improvement won’t offer you a return on investment, you’ll know that it’s not worth laying out the money.
Getting a Home Inspection
One of the smartest things you can do before listing your home for sale is get an inspection done. Doing so will help you decide if you should sell as-is or make some improvements.
Trust Your Real Estate Agent
If you go through the process of interviewing a few local real estate agents and you choose the one you trust, they will be able to provide advice about home improvements. If after your home inspection you’ve decided to make some improvements your agent can make recommendations to help you get the most out of your home improvements before selling.
What repairs should you make before selling?
Some repairs are more worthwhile than others. To figure out which should be the priorities, make a list of all the fixes your home needs and identify the ones that will add the most value. It’s important, as we stated above, to talk to your real estate agent to help you prioritize.
Here are a few things that you should repair if broken and you’ve decided to do some renovations:
- The water heater
- The HVAC system
- The circuit breaker
- Broken windows
- Broken doors or door knobs
- Any major water damage to wood on the ceiling or floors
- Replacing damaged carpet
- Replacing broken appliances
- Laying down a fresh coat of paint
Other Upgrades:
Roofing
If you have any issues with the roof this is something you should definitely consider fixing. Fixing the roof will increase the value of the home and also attract more buyers.
Plumbing
Take a look at the plumbing in your house. Do all the faucets and drains work correctly? This is another area where it is definitely worth fixing if you have the time and money to do so.
The Kitchen
The kitchen is one of the most used rooms in the house. Having appliances that work correctly and are modern will greatly improve the value of a home. A kitchen upgrade normally does not take too long either depending on what you’re trying to do. You should absolutely consider upgrading and fixing this room if you have the time and the money.
The Bathroom
Just like the kitchen, the bathroom is a room you cannot avoid. While you want to be sure the plumbing works, you also want to ensure that the bathroom is neat and presentable. People do not want to buy a home with a bathroom that is falling apart (unless you are selling to a house flipper). It can help the house sell faster and get you more money.
The benefits of making repairs
One of the biggest reasons you should consider making repairs to your home before selling is simple: a well-maintained home will likely sell quicker. It is more appealing to buyers, so there is a chance you could increase your profit from the sale.
Be sure to crunch the numbers before selling your home “as is.” Consider the cost of repair with how much it will affect your selling price. A home that needs a new roof is a good example of a repair you may debate making. Some buyers may be scared away from your home if they know it needs a new roof and the potentially hefty price tag that comes with it. If you know the new roof will cost $10,000, that could be the difference between selling your home near market value or well below.
The local market factors into the decision
Before you decide to list your home “as-is” or to make improvements, you’ll want to know the state of the real estate market in your area. It can be helpful to look at the homes for sale in your neighborhood and similar neighborhoods.
If the majority of the homes have been updated and it’s more of a buyer’s market, you may need to make the same updates just to compete. However, if it’s a very hot seller’s market, fewer fix-ups may be necessary before selling.
As we have shown, you can definitely sell a house “as-is” if you are pressed for time or do not have funds available to make improvements. There are many websites and home buying companies out there that will quickly and easily purchase your home, regardless of its condition. If you are looking to sell your home quickly to get some money and don’t want to worry about getting it ready, you can accomplish this in most instances depending on the current market.
Is it hard to sell a house “as-is?”
That said, it can be tricky to sell “as-is.” Often house buying companies are providing an all-cash offer much lower than market value. They are investors and house-flippers looking to make a profit. While these buyers are out there in the market they might make a low-ball offer that doesn’t pay off your mortgage. Also, they are not the majority of buyers which means, in some instances, it might actually take longer to sell “as-is” than with improvements.
Once again, it depends on your situation. While you can get the most money for your home by fixing it up, sometimes it is not a realistic option for you.
As we have said throughout, the best thing you can do is speak with a local real estate agent. Your agent will analyze your situation and advise you on whether it’s a good idea to list “as-is” or to make improvements. There are times when selling a home “as-is” makes sense, but most sellers will want to make at least some improvements before having listing pictures taken and going through the home selling process.
