The Pros and Cons to Selling Home As Is Versus Fixing It Up
Selling a home, especially in today’s market, requires a lot of tough decisions to be made. Not only do you need to find a new home in your desired area, but you also need to decide how much work you’re willing to put in to make your home sell at full market value.
For some, spending the time and money required to get the work done isn’t always possible. Alternatively, it may make sense to put in a little extra effort to spruce up the home to list it traditionally.
To make your decision process a little easier, here are the major pros and cons to selling your home as-is versus fixing it up to sell it traditionally.
Selling As Is
You don’t have to make any repairs. Depending on the condition of your home, this benefit alone could be a huge time and money saver. Anyone who’s done repairs on a home before knows the potential money pit that they can easily turn into, even if all you need is an extra coat of paint and some new cabinets. Selling your home as-is is like paying someone else to do those repairs. You’re basically paying someone to take it off your hands. In some cases, you may even get to leave some of your unwanted items on the property for someone else to handle for you.
You don’t have to worry about the hassle of inspections. No one likes the idea of strangers walking through their home nitpicking everything that needs to be fixed. Whether you have a leaky roof, a broken dishwasher, or a creaky floorboard, these things may not need to be discussed unless an investor asks about them. Otherwise, like we said before, you can save yourself from the hassle and stress that comes with dealing with inspectors.
You get the opportunity for a flexible close. We’ve worked with home sellers in the past who’ve needed everything from a one-week close to an extended period months. Because there’s usually not someone waiting to move in, real estate investors can be flexible with the closing period. Before accepting an offer, make sure you tell your contact about your specific needs so that you can close in a way that works best for you.
You might not make your home’s full potential. You may have heard it before: “real estate investors are out to rip you off.” While that may be true in some rare (and less-than-ethical) cases, many of these statements aren’t taking the whole picture into consideration.
Consider, for example, that your home is worth $500,000 after repairs. However, in order to get it to that point, you need $15,000 worth of roof repairs, $30,000 worth of foundation repairs, and $20,000 worth of aesthetic improvements (i.e. paint, new cabinets, countertops, etc.). If you were to list your home as is, you could potentially list for $435,000 when you consider these factors alone, but it could take months to close on the home and you will have to pay the fees and commission (usually around 3% of selling cost). Instead, an investor could come in and offer $350,000 all-cash to get your home off your hands, save you from putting $65,000 worth of money and 6+ months of time to sell your home in a way that best fits your needs.
Note: All figures above are strictly for example (and easy math) and in no way match the actual value of someone’s home.
Fixing It Up
The ability to list home at full market potential. For example, you’ve spent months fixing up and repairing your home. You’ve spent $90,000 but it’s worth it because you’re now able to list your home for $120,000 what it was worth before the repairs. Even after paying the commission and other fees, you’ve made a few extra thousand dollars.
Although this is a great option for some home sellers, not everyone is able to sell their home this way. Firstly, it cost $90,000 out of pocket before they were able to make the extra few thousand dollars. Secondly, it may have cost 6-12 months of time to make repairs, list the home on the market, and close the sale. That all translates to a loss of $90,000 for nearly a year.
Depending on your personal situation (financial & lifestyle), the current market status, and the number of repairs your home needs, this is a great way to ensure you capitalize on the full market value of your home. However, it will take time, money, and energy which can easily be saved by selling your home as-is.
You need to put some work in and make improvements. As mentioned above, depending on the condition of your house, you will likely need to put time and money into making improvements to make your house sell-able, especially if you want to list at full market potential.
You have to deal, and comply, with home inspections. Under normal circumstances, every home buyer has the right to a home inspection. These inspections may uncover repairs that you might not want to deal with. However, in order to meet these contingencies, you will have to get the improvements done before closing on the home.
Your closing period is not flexible. Unlike selling your home to an investor, the closing of your home will likely depend on when the buyer needs to be able to move in. That means if you need to sell quickly, it’s unlikely for that to happen. Conversely, if you need to extend your close for six months and they need to move in three, then that time period may not work best for you.
Beachworks LLC local, family-owned company in north Seattle committed to improving the value of our community. For those who need to sell their homes quickly and privately, we we provide an all cash offer and close on your timeline.