2018 is already on a remodeling high. The Residential Remodeling Index was up 5.2 percent this spring over last year, and it’s predicted to grow 5 percent over the coming year.
At least some of those remodels will come from people fixing up their houses to sell. If you’re moving for work, retiring, or upsizing, you’ll probably be selling your home in its best condition in order to get a good price for making a sizeable down-payment on your next home.
If you’re downsizing in order to better manage mortgage costs, you probably won’t have a lot of time or money to invest. In this case, you may look at it as selling an as-is home.
Making a few repairs is a good idea in both cases.
Without making a few basic home repairs, it can be difficult to attract buyers, and you might only get low offers from people looking to flip the home. No one wants to buy something that looks like it’s going to be a money pit, even if they’re willing to invest a little money and elbow-grease themselves.
Small cosmetic fixes can make the home welcoming. Basic repairs increase safety levels in the home and allow them to pass loan inspections. Some repairs also boost home assessments, which can also help lower-end home buyers to get the loans they need.
Even a fixer-upper should be as welcoming as you can make it. Sometimes a fresh coat of paint or new window coverings can make all the difference. If you don’t have time to paint, at least get the home as clean as you can. Shampoo the carpets, clean the drapes, scrub the floors and wash the windows.
In some as-is homes, repairs are needed for safety reasons. Basement bedroom windows may need to be enlarged and lowered in case of fires. Faulty wiring may need to be replaced, and water leaks may need to be found and eliminated.
Without these minimal repairs, the home might not pass inspection, and potential buyers might walk away.
Replacing a broken dishwasher or garbage disposal may require a little more time and money than you’d like, but if it boosts the assessment value of the home, it might be worth it. If the assessment value makes the home a good deal, buyers will take it more seriously, and banks will be able to fund the loans.
One of the first questions you’ll need to ask yourself is whether to hire help to take care of the most basic repairs or to take care of them yourself. Hiring a contractor might speed up the process, but it will also shoot up your investment costs and can cause some upheaval for families still living in the home.
You’ll also need to list all of the repairs that need to be made and prioritize them. In an as-is home, the goal isn’t to make every repair but to make the most essential ones so that the house will sell quickly.
If a home is sold quickly after renovations are finished, the seller might get back about 65 percent of the cost of the repairs.
As you try to make the home more welcoming without spending a lot of money, take the following considerations into account:
95 percent of purchased homes go through a home inspection, which some fixer-uppers won’t pass. That’s not a problem if your buyer intends to flip the home or is a contractor. However, a family looking for a decent home might not be able to proceed if the house doesn’t pass inspection.
Here are some basic repairs to consider so that your home can pass inspection and sell as quickly as possible:
Making repairs to a home to increase its value right before you sell it probably won’t provide a good return on investment. There are a few exceptions, such as minor kitchen and bathroom upgrades.
The amount and types of appliances the home has can add to a home’s value. It might help to replace a broken garbage disposal, dishwasher, or garage door opener, but weigh the costs with the value you expect to see.
Other repair work might include replacing cracked boards on a deck, fixing a garden shed door, or installing an AC system. Again, don’t get too carried away at this point. Just do what you can and stay within your budget.
Figuring out a way to fund the most necessary repairs can be difficult, especially if you’re selling an as-is home in order to get your housing payments and other debts under control. Before you get started on any of the repairs, prioritize them and make a budget.
You might be able to get a home equity loan or personal loan from a bank. If you go through a contractor, they might carry a loan for you, but that could be expensive.
One possibility is the idea of rolling repair costs into the home loan when someone decides to buy it. In this case, you’ll only make the repairs that the buyer wants you to make, and you’ll add the costs of those repairs to the total loan amount.
If you’re trying to save money, doing all the repair work that you can is a good idea. You might be able to get good deals on windows, doors, light fixtures and other items you have to replace at a Habitat for Humanity ReStore or through local classified ads.
However, there are times when hiring a professional—such as an electrician or plumber or even a handyman—can save you time and money. Weigh the costs against your skill set and the return on investment you could get when your house sells.
Remember, not every repair that you put on your list will need to be made before you can sell the home. If it’s in rough shape, it might sell at a lower price to someone who flips homes for a living.
However, if families are looking for a perfect home to buy, the more you can do to make your house move-in ready, the easier it will be to sell. In this case, investing a little more up-front money to help a home pass inspection and look nice for the new owners might be worth it.
Do make sure that you disclose all the issues with the house. Include repairs that you don’t make as well as problems with mice and other pests and what the neighborhood culture is like.