The United States real estate market is rapidly changing. Earlier this year, housing was a buyers’ market and prices were rapidly increasing.
Now, home sales are sliding to levels not seen for half a decade or more. In July, only 511,000 new homes were sold. This marks the lowest figure since January 2016.
Consumers are struggling with high prices and increasing mortgage rates. Many potential homebuyers are on the sidelines wondering whether they should move. Those homeowners dealing with major repair projects are left with a particularly tough choice.
Read on for coverage on the selling a home as is vs. making repairs debate. Explore whether making repairs before selling is wise.
Selling a Home As Is
Many homeowners are choosing an as is home sale and forgoing repairs. There are several benefits to this approach.
For starters, you can receive cash for your home. This expedites the selling process as the buyer does not need loan approval. Look here for more information on how quick home sales work.
This strategy eliminates a lot of the stress for the homeowner. It eliminates the home inspection requirement and the necessary repairs that follow.
It also removes the risk of a home sale falling through due to a lender issue. When a homebuyer requires financing, they go through the lender’s application process. It is not uncommon for a lender to deny a borrower’s application and the entire transaction falls through.
There is a perception that selling a house as is secures a lower price. This is not always true especially given the conditions in the current market.
One reason for this is that housing inventory has not rebounded since pre-pandemic times. Total inventory in the United States is still nearly 44% below where it was in July 2019. The lack of inventory gives sellers leverage at the negotiating table regardless of the home’s condition.
To get the maximum sales price, many homeowners are convinced that making repairs is the best option. Some go as far as getting a home inspection completed prior to listing. This ensures all home issues are identified and there are no surprises after an offer is accepted.
This strategy requires a lot of cash. For example, consider a home that requires a roof replacement.
You are going to need thousands of dollars for the replacement. While your home may fetch a higher sales price, you are merely recouping these sunk costs.
Most renovations do not recoup 100% of the costs incurred. You are likely to only recover a fraction of what you put in to make the repair.
Selling a Home as Is vs. Making Repairs: Which Is Better?
The answer depends on each homeowner’s situation. Homeowners flush with cash may successfully make repairs and fetch a higher sales price.
Selling in as-is condition is the preferred choice for homeowners without capital. It also is favorable for those homeowners in a hurry to get out.
If you enjoyed this article about the selling a home as is vs. making repairs debate, check out our blog for more great content.