Almost every week I speak with a homeowner that is torn between taking our As Is cash offer, and attempting to remodel the home themselves to take a crack at selling retail.
I really cannot blame them for considering, as the television shows make it look easy. Even Vanilla Ice and Snooki are jumping on the bandwagon! (If you don’t know who Snooki is, consider yourself blessed. No need to Google her. It will only confuse you.)
The reality however, is far removed from those shows, and twice as much so if you have no experience in construction.
Here are a few things to consider before attempting to remodel a home for sale.
Time. 2-3 weeks to get different bids from contractors and review your project. 4-8 weeks for actual construction (possibly much longer). 1-2 weeks for punch list work. 1 week to get home ready for marketing. 4-6 weeks to find a qualified buyer (possibly much longer). 4-6 weeks to go from contract to close. Oh, and if the deal does not close for any number of reasons such as inspections, buyer financing gets denied, etc., you get the absolute pleasure of starting over finding a new buyer. Sound like fun? If so, read on!
Cost to renovate, and holding/carrying cost: A typical home renovation can run anywhere from $15,000 for a light rehab to well over $50,000 for a full renovation. And that isn’t even for a large or high end home. Can you afford the mortgage, utilities, taxes, contractor draws, materials, cost overruns, theft, vandalism that can occur with this? Still not deterred?
Costs to sell: Typical real estate agent commission is 6%, seller closing costs are around 2% in Florida, and a high percentage of MLS sales have the seller contributing 3% of closing costs for the buyer. “What? I’m not paying closing costs for the buyer?” Well, then you may not get an offer. Fact is, many FHA buyers will need closing cost assistance, and if it doesn’t come from the seller, that buyer will find another house to buy.
Unreasonable expectations on sale price: Uh oh, you didn’t think your house would sell for more than the updated house down the street with more square footage did you?
Finally, the biggest cost of them all…
Can you guess it?
YOUR TIME
Time is the most precious resource on the planet. You can get more money, but you cannot get more time.
You will never be able to recapture the time spent on remodeling a home yourself, just to “try” to get a few grand extra. Time spent with family, friends, or even a little time to yourself. Are you in sales? A few extra hours on the phone doing more deals could pay off heaps more than painting, hammering nails, and hours spent at Home Depot deciding which cabinets to install.
How do I know all of this? Easy. I get calls from homeowners that spent countless hours and dollars trying to do this themselves, only to end up selling to us in the end. Don’t get me wrong…I always wish them the best when they decide to remodel themselves, and I truly want them to succeed. History is not on their side though.
If you have a home to sell, and are considering an as is offer vs. remodeling yourself, for your sake, please take all factors into consideration. God Bless.