These days a lot of sellers anticipate losing money if they sell their home. If so, they should probably stay put unless they absolutely have to move. If they do find themselves in the position of having to move, they may wonder if they should spend a dime fixing up the place for sale…isn’t this throwing good money after bad? Even homeowners with lots of equity often figure the way to get the most out of the sale is to cut sales costs to a minimum.
This attitude is directly contrary to the notion that the way to make the most money on the sale of the home is by pricing the property appropriately for the market, and by making cost-effective improvements that will result in a higher sale price in a shorter time.
Here’s why selling “as is” isn’t usually in the best interest of the seller. Buyers who see things that need fixing or updating will discount the price of the house by what they estimate the repairs will cost, and they will usually round up to be on the safe side. Then they will discount it another 5-10% for the hassle factor. Let’s say the house would be worth $500,000 in good condition. But the exterior needs painting and the floors need refinishing. The buyer estimates these could cost $10,000. He will not offer $490,000 or even $485,000 because he could buy a comparable home for $500,000 and not have the inconvenience of making the repairs. Instead, he would probably offer only $475,000. The seller could have made the repairs for $10,000 (or less), sold it for $500,000 and netted at least $15,000 more than he would if he had sold it as is.
The other downside of selling a house “as is” is the psychological effect it has on the buyer. First off, it is hard to fall in love with a house that clearly has a long to-do list associated with it. Very few people have the vision to see beyond worn out and dated interiors. So it is unlikely that someone will step through the front door and say “This is it! This is the one.” Secondly, a house that is sold “as is” will leave buyers wondering what repairs are needed beyond the ones that they can see. Is the foundation solid? Is it structurally sound? Afraid of the unknown, they will either pass this house by or discount the price further to account for hidden problems they might encounter later. Now the $500,000 house which has already been discounted to $475,000 gets discounted another $5,000-10,000.
My advice is to make the necessary repairs and enhancements before listing your house. Hire a professional real estate stager to come in and recommend which changes and improvements will yield the highest return on investment. You don’t want to over-improve your house and spend money on things that will not pay out so it’s important to have some professional advice if you want to maximize your return. A good stager can also recommend reasonably-priced tradespeople for these tasks, and some will even oversee the work for you.
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