Should We Fix Up the House Before We Sell?
Terri and her husband recently inherited her parents' home. The house is worth about $85,000 if it's cleaned up. Without cleaning it up, it's worth $75,000. Should they clean this house up to move it faster?
QUESTION: Terri in Chicago and her husband recently inherited her parents’ home. It’s in a small rural town with no industry, and the house is worth about $85,000 if it’s cleaned up. Without cleaning it up, it’s worth $75,000. Should they clean this house up to move it faster?
ANSWER: It’s not really investing it. All you’re gaining for it is speed.
It’s up to you guys because both of these things are going to take time and emotional energy—either sitting on the house or rehabbing the house. It’s up to you guys which way you want to go. From a real estate person’s perspective, they always sell better when they’re shined up and dolled up. You walk in there and it smells like new carpet and fresh paint, and it doesn’t smell like nicotine and I don’t have to look past everything. But if you’ve got to look past stuff, it usually costs you money.
Usually, if you spend $10,000 on stuff like that, it gains you more than $10,000. I think that one of those numbers is probably wrong—either the $85,000 or the $75,000 or the $10,000. In other words, usually if you spend $10,000, it’ll gain you $20,000, meaning if that thing is worth $85,000 fixed, it’s probably not going to bring but $65,000 if you don’t fix it. That’s my guess. Having done a bazillion of these deals, I think that’s fairly close. Usually, you’ll at least get $2 for a $1 on that type of repair—cleaning and carpet and paint and those basic kinds of things. I’m probably going to clean it, but that’s just my style. It’s hard for me to try to sell something that’s dumpy, ya know?
I’m probably going to fix it. I think it’s going to get rid of the house faster, and I think you’ll probably get more that way. I really do.