Whether you’re renovating your home as a fixer-upper or selling because you want to move into a different house, there are pros and cons you can get when you renovate your property before selling it. Whether you decide to invest in the improvements or sell it as-is, keep these facts in mind before proceeding with the renovations.
Renovating Pro: Your Home Will Be Worth More
One of the primary reasons homeowners opt to renovate is because they’re interested in increasing their home’s value. Whether adding more bedrooms, finishing a basement, or renovating an outdated kitchen, you want your property to appraise higher than what you paid for it. A realtor can provide estimated values based on similar homes sold in your area. By ensuring your home has all of its modern amenities, you can make sure it stands out from the competition.
Renovating Con: Most Expenses Won’t Be Recovered in Full
Even if you’re planning to sell your home in a year or less, you likely won’t be able to recoup 100% of your renovation costs, especially if you pay labor directly out-of-pocket (something DIYers often do). The more work involved, such as changing walls and rewiring electrical systems, the easier labor costs to go over budget. Depending on how fast your local housing market moves, unforeseen expenses can leave an unfavorable impression on buyers even if your renovations improved overall quality. If other homes in your area have similar value but don’t have any recent updates or renovations, yours will look outdated.
Selling As-Is Pro: Sell More and For Less
If you are selling a home that needs work, be upfront about it. Potential buyers will appreciate your honesty and are more likely to accept things they can’t change, such as old wiring or a low-grade foundation. If you do decide to renovate before putting your house on the market, try asking for what you want in exchange for a better price on the house, such as payment at closing or fewer expenses in moving costs. You could also sell as-is for full price. In that case, it makes sense to put some money into items or areas that will affect how quickly you can sell (such as painting). But other expensive upgrades might not be worth it — especially if it means delaying an eventual sale by months.
Selling As-Is Con: It’s Possible You’re Losing Money
This is, by far, one of the biggest reasons why people renovate before selling. They believe that they’ll be able to charge more money for their property if it looks better on paper (in writing). However, recent research suggests that buyer behavior has changed, where consumers no longer value new renovations as much as they used to. It’s even possible that your home might sell at a lower price than you initially anticipated because you didn’t give buyers an option to as-is.
Renovating Vs. Simple Updates
When selling your home, it can be tempting to make everything look brand new. After all, nobody wants to buy a house that looks like it’s falling apart! But renovations are not always an intelligent investment. Unless you have spare time or significant skill in construction (or both), renovating your home before selling could cause more harm than good—especially when other upgrades will give you a better return on your investment. For example, consider buying new cabinets instead of updating your kitchen countertops. Although they can cost several times as much as changing out fixtures, kitchens with cabinets in good condition typically sell for 2-3% more than ones with outdated cabinets.
