Should I renovate or sell my house as is?
OK, you know it’s time to move but your house needs a lot of repairs for you to get top dollar. But before you make any plans to sell your house you need to decide if you are going to renovate or sell your house ‘as is’. The basic assumption is that if you renovate the house you can contact a real estate agent who can help you sell for current real estate market prices. Conversely, skipping the repairs and selling as is to a real estate investor will help you save money up front. But with this option you know you’ll be getting a smaller profit on the house when its sold.
For those with limited finances or a small window of time, don’t do major renovations. Just stick to cosmetic repairs and accept less profit by selling to a real estate investor. To get a regular market price you would have to pump a lot of money into repairs which you don’t even have.
Even if you have the money there’s no guarantee that you’ll come out better for initiating major renovations because you’ll be paying 6% of the sale as a realtor commission. That’s not to say that working through a realtor is a bad choice. Those who can afford to go all out on renovations or have a fresh looking house to begin with can do better working with one in my opinion.
As we continue this conversation let’s consider the house below. I found this place yesterday as I was doing marketing through an Orlando suburb.
Amazingly this house was purchased only 6 years ago and it looked like this at the time of the sale.
Anyway, it was obvious that this house couldn’t sell without the help of a real estate investor so I walked right up to the front door and knocked. The middle aged woman who answered was polite enough to listen as I asked her if she wanted to sell her house. But she quickly said ‘no thanks’ and then ducked back in.
I’m bringing this situation up because there is only one option in selling this woman’s property which is working with a real estate investor. If she were to sell it now at the top of the market she could quickly get a substantial amount of money in cash. However, renovating the house to sell through a realtor might cost so much that she might lose money in the end.
This extreme scenario should be in the back of your mind as you decide whether to renovate or sell your house as is. Though your house may be old, doing the repairs and selling through a realtor might make sense if the repairs aren’t extensive. If the wear and tear is overly pronounced and you know you’ll be shelling out big money for repairs you know it’s time to call a real estate investor to get your sale done. Let him fix and flip while you move on to new horizons with cash in your pocket.
Key cosmetic repairs
Paint rooms & kitchen cabinets
Fill in holes with putty
Change dead light bulbs
If you have decided to sell your house as is to a real estate investor you will have a short time period to finish your light repairs. This will be the time from when you are given a ball park quote based on your description of the house ‘s condition to the time your house is physically inspected. Usually this is between 3 to 7 days.
When asked about the condition of your house be sure to include the cosmetic repairs you are about to undertake. Exaggerating is going to cause problems after the inspection because more than likely the offer price will become lower to compensate.
The picture above shows a house in Orlando that was in really bad shape and was sold as is to a real estate investor. The prior owner understood that the house needed extensive work so he opted to let the investor handle it. I’ll give you a run down of how much the renovation cost.
Renovation costs
$2,800 to paint house exterior
$300 for each replacement window from Home Depot
$350 for mulch & landscaping
$330 for a pressure washing
$135 for each new interior door
$1,800 for new tile, vanity and toilet
$7,000 to replace kitchen tile, sink, dishwasher and cabinets
$3,000 to carpet entire house
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$15,715 in total
Keep in mind, if a regular house seller attempted the renovation by hiring handymen the cost would be about $4,000 more. Why? Because a seasoned real estate investor can find materials cheaper and efficiently manage projects. They can also get discounts from their inner circle of contractors because the contractors get frequent work. If you have no experience and would like to attempt a renovation yourself be warned that substandard work could lower the value of the house.
If you believe that renovating your house is the best solution then it’s time to contact a realtor. Using this venue requires that you be able to open your house to the public for many months. When I say many months it could be anywhere from 3 to 6 or whenever your house sells. If you have a deadline for selling you should understand that you may run into problems if your house doesn’t sell fast.
Renovation tips
1) Move half your furniture out now – The first key for every Orlando homeowner who is bent on selling their house through a real estate agent is not very obvious. Before your your agent starts showing your house you need to move a lot of your furniture and belongings out and into storage. This will make the rooms look bigger. After the sale you can consolidate your stored belongings with the stuff you left behind into one truck. This process will save you time in the long term.
2) Change out dead bulbs and add more lighting – You will have a bigger chance of selling your home if you’ve removed the dark pockets. Light flowing through a room with a sparse amount of belongings will have a positive psychological impact on a buyer. Consider buying cheap light stands that you can strategically place around the house for added effect.
3) Cut your lawn frequently – Buyers love the smell of freshly cut grass before going into a house. This sets the ambiance that is needed for a positive experience.
4) Paint your house – Have you ever been in a room in Orlando that had dark paint? Probably never. In Florida people appreciate the style of light colors. If your house was built in the 50s or 60s you may have a problem with yellow or turquoise. If you’ve chosen to work with a realtor you need to wholeheartedly bring your house to today’s standards.
5) Power wash the sides of your house – You probably don’t have a power washer laying around the garage but you can rent one from Lowe’s or Home Depot. The combination cleaning your house’s facade plus a freshly cut lawn can put buyers in the right state of mind to do business with your real estate agent.
6) Change your counter tops to granite – This really should be number 2 or 3 on this list but you may not want to spend the money for such an invasive renovation. If you are in doubt to the material try granite because you can’t go wrong with that.
7) Change your faucets and sinks – The fad that we’re in now for faucets and sinks is stainless steel. Find items that are stylish yet cost effective.
8) Replace the light switches and outlets – You want a potential buyer to feel newness in every way. When he/she sees a yellowing light switch or outlet the feeling is that the electrical system behind the wall is old.
9) Stage your house – If you want to increase you chances of selling your house you can contact a staging company to put furniture and nick-knacks into each room. The first merit of this is obvious, giving a newer and more upscale feel. It also forces you to take care of the logistics of your move early. When everything is packed away into a storage facility it will be ready for your move when the time comes. The caveat of staging is the cost. Some staging companies charge around $2,000 per month. And believe it or not, the staging business is lucrative enough for some real estate agents to go into it full time.
Conclusion
Deciding whether to renovate or sell your house ‘as is’ in Orlando really depends on 2 factors: shape of your house and time you have to sell it. If your house is in poor shape and you have a tight deadline you should sell it as is by contacting a real estate investor. A house that’s in great shape with no selling deadline should be sold through a realtor. If your situation doesn’t fit clearly into one of these ends of the spectrum, you need to think of the consequences of a failed sale through working with a realtor.
1) Houses in preforeclosure status could end up in foreclosure.
2) Houses of divorcing couples could lose a $250,000 tax benefit by being sold after the divorce is finalized.
3) Leaving a house for a job relocation could make selling the house too difficult if you are working far away.
4) Greedy heirs of an inherited house could destroy their family relationships and wear out the executor who needs to maintain it.