Home Selling in 38119>Question Details

Mikecondon19…, Home Seller in Burlison, TN

Im going to take a hit on my home. I paid $135K and may get $110K. It needs cosmetic updates. Would you recommend spending the $ if I plan on a loss?

Asked by Mikecondon1970, Burlison, TN Tue Jan 17, 2012

House needs new carpet, landscaping and fascia replaced.

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14
Good points mentioned below - Another question for you - do you owe $135K? If so, I would add that you may want to consider a short sale. Through a short sale, your lender agrees to reduce the amount they are owed in exchange for a release of the mortgage. The lender pays all the costs and commissions.

Be sure to interview several agents who have short sale experience.

If you owe less than the property is worth, I would consider just selling before the value decreases further. Contact a Realtor in your area.

Good luck to you!
3 votes Thank Flag Link Tue Jan 17, 2012
There are so many homes for sale but one that does not need work, sells faster. If it comes down to a Buyer choosing between two homes, they will choose the one with the best price and least amount of needed repairs.
2 votes Thank Flag Link Tue Jan 17, 2012
There are two calculations involved.

The first deals with the amount of value to be added by the cosmetic updates. Let's say--using your approximate numbers--that with no cosmetic updates at all you'd be able to sell it for $105,000. With the cosmetic updates, you'd be able to sell it for $120,000. The question, then, is how much those cosmetic updates cost and whether they'd be cost-effective. If you could spend $5,000 and increase your sales price by $15,000, seems to me it'd make a lot of sense. Yes, you're still losing money. But you're losing $10,000 less.

As a side note: Generally cosmetic updates (paint, carpet, a bit of landscaping) tend to be among the highest-return areas. Not always, but very often.

The second consideration deals with how quickly the house sells. Let's say the cosmetic updates only return 100% of investment. You spend $5,000, but that only raises your sales price by $5,000. Is that a wash--a neutral outcome? Dollarwise, yes. But the house very likely will sell quicker. The walls that need painting, the carpets that need to be replaced, the dead bushes in the front lawn . . . all those will turn off some buyers. It's likely to take longer to sell. So--just making these numbers up--let's say you do the fix-ups and get a contract in 60 days. You don't do the fixups and you get a contract in 180 days. Your net is the same, but you've sold your property 120 days faster having done the fix-ups.

Your Realtor should be able to give you a fairly solid idea of what fix-ups should be done, and what your return on investment will be. And he/she also should be able to give you some idea of days on market, either with or without the repairs.

Hope that helps.
2 votes Thank Flag Link Tue Jan 17, 2012
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
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You might loose more if you don't do the work. Cosmetic work has the best return value. If the house sits and sits before selling, you won't get the price you need to get out of it. You can also always consider short selling to get out of the house for no money.
1 vote Thank Flag Link Tue Jan 17, 2012
Don gave a very thorough synopsis. If it is simply cosmetics do it. The highest ROI is investing in cosmetics.
The buyer will subtract from their offer more than the retail value for these same cosmetics. Then you take a bigger hit.

ESPECIALLY items that will appear in the inspection report such as wood damage or wood rot, peeling paint, open soffits and damaged facia. Interior paint returns more than carpet UNLESS the carpet is retaining odor or is really dirty or worn.

Consult your local real estate professional to strategically position your home in regards to competing homes.
Web Reference: http://www.MyDunedin.com
1 vote Thank Flag Link Tue Jan 17, 2012
Not unless it accelerates the sale and then only a small amount on the exterior for first impression. Have an experienced local realtor advise you.
1 vote Thank Flag Link Tue Jan 17, 2012
No. You're already losing money on the sale. I do not see any reason to increase your loss by spending more.
1 vote Thank Flag Link Tue Jan 17, 2012
I would price it at slightly above what it is worth and see what happens. No sense in throwing good money after bad.
Web Reference: http://fredglick.com
1 vote Thank Flag Link Tue Jan 17, 2012
Mike,

The "as is" route will get you .40 to .60 cents on the dollar. Can you afford to take another hit? In this price range more than likely your buyer will be going FHA. Some of the repairs you mentioned my be required in order for the buyer to obtain that loan. It is always cheaper to do the repairs on the front end, than to open a can of worms on the back.
0 votes Thank Flag Link Fri Jan 20, 2012
So, you're going to buy a used car, and two exact used cars are on the lot. One was shinny, detailed, clean, no scratches, dings or dents. It smelled nice and fresh, and gave the appearance of being well loved and cared for. The other car was stinky, covered with dirt and street grime, the seat cushion ripped, and the tire was almost flat. If these two cars were "valued" the same by Kelly's Blue Book because of the make, model, and year, which car do you think will sell first? Both cars will sell for less than they were purchased for, but do you really think that anyone would be drawn to the car that is not "staged"? Eventually, when the second car sits and sits with no offers, the owner will then have to clean it up and make the repairs in order for it to sell, or take a lot less than the car would bring if it were already done. Same with homes! Why would anyone want to buy a home with old, tired carpet, no curb appeal, and rotting wood/peeling paint when the same size home on the next block is clean, fresh, and move-in ready ? Don't you think a buyer would wonder what else the homeowner didn't do to care for and maintain the home? So, you can either clean up, fix up, and dress up your home and make it appealing to buyers, or you can let it sit and sit on the market, not sell, the listing gets "old", the price reduced, and then you'll either have to pay for the home to be repaired after an inspection, or the buyer will lowball an offer to make up for what he "imagines" it will take to fix it up. Either way, it pays to get your home in the best possible selling condition prior to listing it.
0 votes Thank Flag Link Fri Jan 20, 2012
I owe right at $100K on the house. I just want to get out from under neath it and find a new place. I would estimate it would run me another 5K to replace carpet, rotted fascia, landscape. I'd rather just have the house sell as is. I am not interested in staying in the house hoping for a market upswing.
0 votes Thank Flag Link Tue Jan 17, 2012
It's a beauty contest out there and the prettiest one will win -not the one with the nicest bone structure! The cosmetic updates are going to help your marketability not necessarily increase any of the appraised values. Do you want to sell and move on or do you want to hang on to it for awhile and see if the market goes back up so you don't take the hit you already are aware of? You know the answer here.
0 votes Thank Flag Link Tue Jan 17, 2012
Hi Mike, I specialize in in-city Memphis properties. I would be glad to have a look, and offer some advice (no obligation). Every property and neighborhood is unique. Sometimes a very small investment in fixing up will reap big rewards. Give me a call.
Web Reference: http://spake.com
0 votes Thank Flag Link Tue Jan 17, 2012
If it just needs painting, etc. I'd do it otherwise you'll take a bigger hit & it's take forever to sell.
0 votes Thank Flag Link Tue Jan 17, 2012
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