I posted a few months ago about selling a house I inherited.

We took the advice given and have involved a realtor/broker. She came out and looked over the house today; she had some recommendations for improvements.

She suggests:
- replacing the carpet in the high traffic areas
- replacing the kitchen appliances (the ones currently there are the originals, from 1980.)
- replacing the tile in the entry way (it has a small crack in it)
- having someone come out and evaluating the foundations; if there are problems, have it fixed.
- a bunch of caulking around cracks
- a bunch of cleaning, shining up the cabinets, washing the mini blinds, etc.
- taking out a home warranty on the house, so that we can have the ac/furnace replaced (also the original from 1980.)
- replacing light fixtures with more modern ones (again, the originals from 1980)

Some of these things seem pretty simple and common sense, like cleaning the mini blinds and shining the cabinets. I can even get on board with the home warranty thing, since a new ac/furnace would run us around $5000. However, the appliances and carpet and foundation work, etc, seem like pretty big deals.

Her estimates on what we can sell the house for run about $119,000 as is and up to $145,000 with the most improvements. Is it really worth putting all the time and effort into doing things like the carpet and appliances?

Her reasoning was that if we get a first-time home buyer, they might not be able to afford to put in new stuff themselves, as they might not have the cash on hand. But at the same time, we don't have a whole lot of $$ laying around to buy stuff like that either. Plus the time factor.

Given that there have been 3 short-sells in the same area, along with 3 foreclosures, and that the house backs up to a major tollway, would it be worth it for us to do these major improvements?

Usually it's what you CAN'T see that is the problem in hidden costs. Renovations always take longer and are more costly than anticipated.

People that inherit homes usually want to sell them quickly and just get the money. If you fix up you have to go all the way. If you redo certain things and not others because you run out of money or it's all you want to do it's a waste of time and money.

You might think paint as a seller (500.00) BUT the buyer thinks (painting on my weekend off,labor,picking up materials,supplies)1,800 dollars.

For the buyer if they have to do the work they want labor sweat equity in a reduced sales price.

Is your market currently trending UP or DOWN.Example your agent shows mls solds for this year and values are appreciating 1 percent a month,flat, or depreciating 2 percent per month.

By knowing the data if your reno took months you could lose 6 percent of value at a 2 percent decline in 3 months time.

A homebuyer that wants to do it their way in exchange for a lower price or an investor who wants to rent it out seems like a likely buyer.

A flipper investor will want it to cheap.A rents good in your area compared to home sale prices?

You need to ask more questions of your agent.

Good Luck

Those are excellent points I hadn't even considered.

I'm going to email those questions to our agent right now.

If I'm reading you correctly, it would be better to sell "as-is" for the current market value than to do a half-way fix up of the place?

Obviously cleaning is a necessity. I know that. But what about replacing the appliances? Is that also a necessity?

Part of the problem with making very many improvements is that they look so good, they play up the need for more improvements. If you replace the carpet in high traffic areas, the carpets you don't replace will look 10X's worse than if you don't replace any carpet. So long as the appliances aren't avocado green or harvest gold, and they work fine, I'd leave them.

You might want to pay for a home inspection to see whether you do have any problems with the major things -- heat 'n air, foundation, plumbing . . . Yes, it will cost a bit to get the home inspection, but you can make better informed decisions afterwards.

Good luck!

Susan you have to do an analysis of COST versus ANTICIPATED profit when you sell.

Depending on how old the property is you can have asbestos shingles,asbestos or lp siding,aluminum wiring,radon,galvanized plumbing,mold,polypipe,foundation that needs shoring up to today's standards etc.

An investor who buys properties to rent can do the repairs much cheaper than you as they have cheap contractors and pay wholesale prices for materials.

What I am saying is a buyer isn't going to look at a place and say WOW the kitchen looks great but the rest of the place needs some work so I am going to offer full market value.

The main mistake that happens time and time again is a seller will set a budget say 10k to all fix things.Then the budget half way through reno's mushrooms and the seller says stop I can't pay anymore. Now what you have is a property that is fixed up halfway.

I mean if you are only talking getting 20k more and have to spend 5k to 10k to maybe get it is it worth it?

If It was me I would probably try to sell with a lower price AS-IS and be done with it.

Ultimately it's your decision.

All great points above. Bottom line is this: if you want top dollar for your property, you'll have to do all the improvements. There are 2 reasons:

1) Most people (buyers), especially retail buyers and first-time buyers don't have an ounce of vision to see beyond what's in front of their eyes. If they see a house that's cheap but may need 15k of repairs, they'd rather pay 30k more for a house that's fully renovated. Most people don't want a rehab project.

2) A lot of buyers, especially first time home buyers, are getting in with very little money down. If you do the repairs, they'll pay for it with a mortgage. If they do the repairs after they purchase, they have to pay cash.

Depending on your market and how fast stuff moves, it certainly may be a big risk investing the money to do the repairs for a house that may not sell for a long time. You have to analyze the cost/benefit as the folks above mentioned.

I'm not sure which way to go. My husband wants to try to get the top dollar for the house, which means fixing it up. However, I see this as a big time and money drag and would rather just be done with it (especially since the whole project is *my* project.)

Basically, the realtor told us that given the market in that area, and given the fact that there is a tollway directly behind the house, the most we could realistically expect is $149,000, and that is with all the fix-ups done. She said if we sell "as-is" we're looking at around $119,000.

She estimated our costs for the fix up as being the cost of appliances (she estimates around $1500), the cost of recarpeting 2 rooms (which I think will make the rest of the carpet look terrible in comparison), whatever foundation work needs to be done, and re-tiling the front entry way.

Never having done a big project like this, involving renovations, I don't know how to estimate how much these repairs will actually cost. So I don't know how to determine whether or not it's worth it.

Perhaps we could offer the buyers some kind of carpet allowance? And some kind of appliance allowance? That way, they could still know that they are going to get the improvements, but we don't have to do it, and they can pick what they like.

Can you do that?

You can but once again the buyer will want the biggest allowances to buy the top of the line stuff because they WILL be living there. You the seller are hoping they buy the cheap stuff to keep the allowance low.

Where is this property located? Are you in a subdivision or are you on an individual parcel surrounding raw land or commercial?

What does the land use map show for the area? If you are in a transitional corridor and have a decent size of land 1/2 acre or more the land could be worth more than the house.

Your agent is grossly underestimating repairs. Sounds like your agent is suggesting putting lipstick on a pig. Buyers are not stupid and will know when you mismatched new and old to freshen it up. They WILL NOT pay top dollar for that. Like I said before there is no magic bullet. You have to go all the way with renovations. Now that doesn't mean reno's have to be expensive they just have to look it.

To get estimates call out contractors for free bids.

Just a quick note - make sure you consider all the collateral damage that can come from foundation repairs. Depending on the severity of the issues, correction can cause damage to plumbing, exterior veneer and interior (drywall, doorways). Also, if it is on a slab, the interior flooring will be damaged if piers have to be added in interior locations.

super realtor is right - your Realtor is likely not qualified to estimate repair costs, and you can't do it half way.

Giving allowances is tricky, as you lose segments of buyers that way. Why not just price the house as you should for as-is condition and let them worry about it? The lower your list price is, the larger the pool of buyers available to you. If you price it at $150K and offer $5K in repairs, you miss out on those buyers who would only qualify up to $145K and be willing to do repairs themselves.

There are also all the things to consider with regard to location (see super realtor's post).

I would also recommend getting more than one agent's opinion. You aren't married to the first one you talk to (unless, of course, she got you to sign a listing agreement already).

I haven't signed anything yet. I'm actually now looking at having someone come by and evaluate the house who buys houses and flips them for a living. I know his offer may be lower, but he says he will save us on closing costs, commissions, and repairs, and can have the check to us in 10 days after we make a deal.

To me, this sounds like a wonderful idea.

However, it's selling my husband on it that's the problem. We'll see how much he offers. If it's anywhere close to what this first agent suggested as the low-end, I'm going to push him to go for it. It will relieve us of the burden and get us the money without us having to do any work, really. I suppose that sounds lazy, but I have no idea what I'm doing, I don't really want to do it, and I don't see the benefit in putting lipstick on a pig.

Thanks for the advice.

If he flips expect the price to much lower. Flip value and full market value are vastly different. The flipper will have alot of resale costs.

You will get much more money from an investor who wants to rent it out and hold longterm as their are no immediate resale costs and the gain can be realized over time.

good luck

I would rather advise you to just sell it AS-IS than spend any time or money on it. The difference between the AS-IS sold price and repaired/rehabbed sold price could very easily be eaten up by costs/repairs/etc. And since there are no guarantees regarding what portion of the money you spend being recouped, why risk it?

An experienced flipper/rehabber/investor knows what they are doing since this how they make a living. Unless you have the experience, money and time to do it right, the risk seems greater than the reward.

As a house flipper in this market.. I would advice doing pretty much anything that doesn't take money. Unbelievable ROI on this minor fixes that make your property seem 'ready to sell'... as far as major improvements... hmm... 3 years ago I would have said yes, but today I would think twice.

Look at the comps, and always make sure if they have it or not, etc. Instead of buying a new a/c you could always reduce the price 5K... that would probably be my move. Good luck with the sale.

AS IS is the way to go, but do the simple stuff. As Augusta said, the return on the simple stuff is great. What your husband is suggesting is that you do your own sort of flip. That almost never works for the newbie. Renovation costs are way beyond what you would anticipate, and do-it-yourself results are never as good as you anticipated.

I'm concerned, though, about the following piece of advice from your agent: "taking out a home warranty on the house, so that we can have the ac/furnace replaced (also the original from 1980.)" A home warranty will NOT replace ac/furnace that is faulty at the time you took out the warranty. If the agent was suggesting some sort of scheme to defraud the warranty company, I'm concerned about your choice of agent!

I haven't signed anything with this agent, so I'm in no way committed to anything with her. I emailed several of the big name real estate companies in the area, and she was the only one who responded to multiple inquiries, which is why we've utilized her so far. But there are several things about her that have given me pause, so I doubt we'll go much further with her.

When you say there are little things we can do to make a difference, what kinds of things do you consider little things? Obviously cleaning the house, weed & feeding the yard, that sort of thing, but what else?

Would someone who is going to buy the house to flip pay much lower than someone who is buying the house "as-is"? I just think we'll be saying a lot on closing costs and commissions, so it might even out.