Most sellers often wonder whether they should repair the house or sell it as it is to get a higher profit. Well, as you have already heard, repairing the old house before selling could increase its market value. Hence you can sell it for a higher price.
However, this is not always true. Sometimes there can be situations where your repairing cost surpasses the proceeds you could earn by selling the house.
So the decision to renovate the house or sell it as is mainly depends on the context. Therefore this article will help you determine whether your situation calls for a renovation or not.
What should you consider when deciding whether to repair the house or not, before the sale?
Most homeowners invest a ton of money for renovations before the sale. They might even spend money to repair the flaws that the buyers might not notice. Therefore if you are planning to sell a house, consider these factors before deciding whether to renovate the house or sell it as is.
1. Why are you selling the house
This is an essential factor which you must consider when selling anything, especially if it has a significant value. So why are you selling your house?
1. Need cash to spend immediately:
If you need cash immediately to spend on education or something important, you should not waste time renovating the property. However, you should keep in mind that having major flaws in your house could reduce its market value and make it difficult to sell.
2. To settle debts:
If you are selling the property to pay off the debt, we recommend not getting into more loans and debts to renovate the old house. In these situations selling the house as it is would be a wise option.
3. To buy another property:
You could also be selling the house because you intend to buy another property. If that property is more expensive than the current house, then you could be in a dilemma. You can either spend the additional cash in your hand to renovate the house and increase its market value to get a higher return. Or you could use that cash to buy the new property along with the sales proceeds you get from the sale.
2. Does the faults in your house reduce the market value
You should check the flaws in your home thoroughly and identify the ones that could reduce your house’s market value. The indoor and outdoor paint, kitchen, bathrooms, and floorings are some of the flaws that draw a buyer’s attention.
If these are outdated or broken, they could reduce the house’s market value, making it challenging to sell.
It would be ideal to repair these flaws before selling if you want to quote a higher value for the house.
3. What is your source of capital
Another deal-breaker is how will you find the capital for renovations? If you have sufficient cash in hand for the renovations, then you are better off. In such situations, you only have to worry about whether a renovation is required under the given circumstances.
However, if you don’t have sufficient cash in hand, you would have to get a loan to do the renovations. This could affect you in different ways.
Loans can put you in more debt and pressure you to sell the house at a higher value to overcome the debt. Sometimes the value you are pressured to sell could be well beyond the market rate.
Therefore if you are planning to apply for a loan, you are better off selling the house as it is. If you still want to renovate by applying for a loan, you better consider the return on investment carefully, as discussed in the next point.
4. How much would you get as the return from the investment
Before making any decision, you should evaluate the return on your investment. Will the sales proceeds cover your expected cash inflow and renovation cost?
First, you must get an idea about the value of your house. It’s better if you can hire a property valuer to get a clear idea about the value of your property. Then consult a realtor to find out whether the property needs any renovations.
A qualified realtor would advise whether your investment in renovations would pay off once the house is sold. If the expected sales proceeds are not enough to cover your expected cash inflow and the investment in renovations, then it is better to sell the house without a renovation.
5. What is the state of the current housing market
The state of the current housing market plays a vital role in deciding the value of your house. If the market is hot, the property could be sold within a few days with minimum renovations and upgrades.
If the market is stagnant, you might have to make an extra effort and invest in renovations and upgrades to sell your house. Under such market conditions, holding on to your house without selling until the market settles down is better.
This is because if the current real estate market is stagnant, you might not be able to sell your house at the expected value even after a renovation. In these circumstances, it is better to rely on the advice of a reputable real estate agent.
6. What is the state of the competing houses
You should check out the houses which were recently sold in your neighborhood. Your realtor might be able to provide you with a competitive analysis of the neighboring property sales.
This will help you get a clear idea of whether your home could be sold for more or less than the other houses in the neighborhood. The analysis would also help get a clear idea of whether your house would need any renovations to be sold for a hot price.
If the houses in your neighborhood got sold out quickly, with minimum renovations, then that could mean that your neighborhood is more valuable. Therefore the buyers give relatively high value to the land rather than the house. Under such circumstances, you might be able to skip the renovations.
There is a common belief that a renovation could increase the market value of a house. This is true, but a renovation might not always be profitable. Therefore you must analyze your context.
Consider the above factors carefully and determine whether your house would need any renovations. If you feel it needs renovations, visit our website to find a tradie to get your job done.
We have hundreds of individuals listed on our website. You can get quotes from a couple of them and choose the best option that matches your budget.