Tuesday, November 26, 2013

Selling a House As-Is or Fix It?

It is easier to sell a house that is attractive, which means that you spend a little time and money on cosmetics. This is partly just a matter of making sure the house is clean, the yard is neat, the driveway is swept, bushes pruned and so on. Easily fixed structural defects, like a loose shingle, should be fixed. Houses almost always look better when furnished than when empty — and they also look larger. If you are moving to another residence and plan to take your furnishings with you, try to arrange to show the house before you move out of it. But if your house also has structural defects that are costly to fix, the challenge is in deciding whether or not to fix them before sale.

Every house has defects, some obvious and others hidden. Both types can affect the price. It is a mistake to think that a potential buyer will assume that the only defects that exist are those that are visible. Serious buyers will most likely invest in an inspection. Buyers that don’t retain an inspector will probably assume the worst about the unseen condition of the house. There aren’t many buyers who will pay a price based on the assumption that everything they can’t see must be OK. Pricing the house on that assumption is a good way to keep it on the market unsold indefinitely. While you continue to pay for utilities, taxes and insurance, the condition of the house worsens. Facing up to the issue means asking yourself whether you will come out better if you fix the structural defects, or if you offer it at a lower price “as is.”

There are two circumstances that favor fix-up before sale. One is where there is a large variance in the actual cost of the fix-up, and a potential buyers over-estimate of the cost. The second and probably more compelling circumstance is where potential buyers are only able make a small down payment, and are therefore not able to bear the cost of repairs after purchase. If a house has significant defects, the smart seller will order his or her own inspection, and solicit estimates of the cost of required fix-ups. This will help in deciding whether the best arrangement is pre-sale fix-up, sale as is, or some combination of the two.

George Sinacori   ges.rellc@ymail.com 

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