If you are looking to move out of your outdated house, sell an inherited house or sell a rental property, you are probably questioning how much work you should put into getting your house ready to sell. There is no question that having a home in excellent condition, updated to the latest styles will get you the top dollar for your house, but getting your house to that level may not be worth it.
According to Dave Ramsey, the average ROI (return on investment) for a kitchen remodel is only 54%. So if you spend the average of $64,000 on a kitchen remodel, you will only add $34,560 of value to your house. That puts you in the hole $29,440. But it gets worse. When you go to sell your house, you have to pay commission of 6%, so that increase in value costs you an additional $2,073. This means you would be paying your buyers $31,513 for their nice new kitchen.
Let’s reel it in a bit, and do a minor kitchen remodel, only spending $21,000. The national average ROI for this budget is 81%, so you will only lose $4,000 on this remodel.
Is It Worth It?
It’s clear from the numbers that it is not worth remodeling your kitchen, or any other part of your house, if you are just going to turn around and sell your house.
So what can you do? You have three main options, each with their own benefits and pitfalls:
List Your House With a Realtor
A realtor will always help you get the highest dollar for your house.. Of the three methods, this method will get you the most money on paper, but it comes at a price. With this method you have to pay your realtor 3%, the buyer’s realtor another 3%, and you can expect to also pay the buyers closing costs and/or give allowances for needed updates like flooring. All these fees and allowances will cost you thousands of dollars.
List Your House For Sale by Owner
If you want to sell your house as-is, on the MLS, you can avoid all the fees, but you may still not be able to avoid the closing costs and allowances. Further, FSBO houses sell for about 16% less than their realtor represented counterparts. You also take on the costs the realtor was paying for, ie photos, signs, the actual MLS listing. And finally, the listing doesn’t show up on as many websites, so it isn’t seen by as many potential buyers, which can mean very long listing times, which costs you in mortgage payments, utilities and taxes.
Sell to a Real Estate Investor
When you sell to a real estate investor, you will get the least amount on paper, but may actually end up with the most amount of money in the bank. Unless you are going through an ibuyer, like Opendoor, the offer you get will already take into account all needed repairs, closing costs and any other fees. That means there are no surprises after an inspection, no surprises when you get to the closing table. What you were offered is what you will take home. Although it may not seem like a good idea, taking a close look at the numbers makes it clear selling your house as-is often makes good financial sense. If you are interested in selling your house as-is, you can contact us for a free, no obligation evaluation of your house.