It’s a standard question once you’ve decided to sell your house: should you sell your house as is or renovate first? One look on the Oahu MLS shows a mix of properties both renovated and fixer uppers requiring some — or a lot — of TLC. What does that mean? It largely means that any house can sell, given the right price. After all, even if your house is a true fixer upper, there’s a current market value for it. As one of my real estate coaches likes to say “You’d buy it for a buck, right?”
Your big question becomes: Can I accept the market value of my house now or will it be worth it, both in time and money, to renovate it before selling?
We should assume that you’re not facing any pressure such as foreclosure or probate that would change the parameters of your decision. Let’s just assume that time is not a problem.
The question is now about money and price.
Let’s say, for example, that you own a single family house in Honolulu. Analyzing, the current comps, you estimate that your house would be worth $600,000 if it was fully renovated. However, it needs a fair amount of work — a modern kitchen, renovating two bathrooms, paint inside and out, new flooring, and a new roof. You get a couple quotes from general contractors for $60,000.
You might conclude that your house is now worth $540,000 (renovated value minus the cost of renovations). However, that’s not necessarily the case. It’s likely worth closer to $525,000. Why?
Not every buyer wants to be a project manager. They want turnkey homes or homes that need little updating on their part. So you need to account for the sweat equity in estimate the current value of your home.
Remember: when you are selling your house, you’re also competing with the other similar houses available on the market. So to incentivize qualified buyers to choose YOUR house over the others, you need to account for the “headache tax” of taking on the required renovations in addition to the actual cost. This turns off many buyers (not us – we love to buy fixer uppers).
So back to the question at hand: Should you sell your house as is or renovate it first?
Simply put, if you have:
- the time to handle the renovations
- the money to pay for the renovations
- the proper knowledge of what renovations to do (and what not to do) for today’s home buyers, and
- the willingness to take on the project, then you’ll get more money by selling your house if you do the renovations.
However, if you lack the funds or the knowledge of what renovations are worthwhile, or if you simply don’t want to pay the “headache tax” of managing the project, then perhaps selling your house “as is” is your better option. Of course, if you’re pressed for time because of an impending foreclosure or other matter, then selling now will also make more sense.