- - Thursday, March 8, 2012

For many homeowners, when it’s time to sell, it’s often also a hectic time - packing and cleaning, preparing to move out of the area, beginning a new job, ending or beginning a relationship. Add home renovations to the mix, and it’s easy to see why many homeowners throw in the towel and opt to sell “as is.”

But real estate experts point out that’s typically not a smart move - either financially or logistically - because the house likely will sell for significantly less if it needs repairs and it could stay on the market for much longer.

On the pricing side of the equation, Harold Huggins, a Realtor with Harold H. Huggins Realty Inc. in Burtonsville, said it works like this: “Take the cost of the repair and multiply by at least two and subtract that off the asking price.

“So if your house needs $20,000 worth of repairs, figure on $40,000 to $50,000 coming off the listing price. It’s better to put that money into the repairs and keep the difference for yourself.”

The predominance of two-income households is one of the reasons many buyers offer so much less on a house that needs repairs, Mr. Huggins said.

“It’s not just a factor of the cost of the repairs, but also the time and aggravation to schedule and oversee the work,” he said.

Jonathan Miller, president and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm, agreed, pointing out that banks and buyers are equally leery of homes in poor condition.

“Lenders are actively looking for reasons not to lend - they’re very risk-averse right now,” he said. “And because of the economic realities, consumers - if they are able to line up a mortgage - they don’t want to have to turn around and then take out a home-equity loan to make repairs. That adds another layer of complexity into the transaction.”

Mr. Huggins pointed out that selling a home quickly is a cost savings in and of itself.

“If a house is in perfect shape, it’ll sell in a matter of days or weeks, versus months if it needs work,” he said, explaining that this saves homeowners from making additional mortgage and tax payments.

Mr. Miller added that with so much economic uncertainty, it’s advantageous to sell sooner rather than later.

“The S&P is falling; Greece is unraveling and threatening to bring down Europe,” he said. “It’s smart to play the odds and get your home sold as fast as possible, especially if the market in your area is declining.”

Elizabeth Weintraub, a broker associate at Lyon Real Estate in Sacramento, Calif., said some homeowners elect to sell as is because they mistakenly think the new owners will want to make all the decisions about repairs.

“But they don’t realize that if there are too many problems with the house, the buyers will just decide to buy another house,” she said, adding that homeowners looking to sell should focus on the big systems of the house.

“Buyers expect the major components of the house to work - the central air and heating works, you’re able to lock the doors, the lights should go on when you flip a switch. If the dishwasher’s on the blink, that’s not going to blow the deal.”

Many homeowners buy new appliances right before a sale, hoping it will be a selling point, but it rarely is, Mr. Miller said. “They’re all new, but they’re the cheapest ones you could find at Home Depot - maybe the buyers would’ve chosen something higher-end, like a fridge with an ice maker,” he said.

Mr. Miller said it’s best not to make any changes that are personal.

“Steer away from anything that’s not neutral,” he advised.

Ms. Weintraub agreed, noting that often homeowners invest too much money in design elements that are too individualized.

“If everyone just replaced old carpeting and painted the walls, that would be half the battle,” she said, adding that new carpeting should be beige and paint colors should be pale browns. “Go for coffee and cream colors,” he said.

To get a better feel for what repairs or cosmetic updates are necessary for resale, homeowners should enlist a neutral third party to look critically at the house and make suggestions, Ms. Weintraub said.

“It could be an agent, it could even be a neighbor - it just has to be someone who will be honest with you,” she said. “Homeowners are too close to their homes, so they can’t be logical and really see the house as it is.”

Mr. Miller agreed that a listing agent who is familiar with the local market is a wise choice for this type of assessment.

“The goal is simple, so you say: ‘I want to sell my home and get the most for it - what changes do I need to make?’ ” he said, adding that it’s best not to ask a family member or friend who is a Realtor. “A friend or family member is likely to say, ‘It’s a beautiful home - it doesn’t need anything,’ or [that person] will be very critical and you’ll wind up taking it personally.”

Ideally, Mr. Miller said, homeowners should start making home improvements three to six months before putting their property on the market. But if the home must be sold quickly - for a job transfer, for example - talk to the potential buyers about the repairs.

“Be upfront about the work that needs to be done and allow a credit for some of those repairs,” he advised. “Make that part of the negotiations.”

Ms. Weintraub agreed that that is a good strategy.

“If it’s a big, expensive repair like a roof, tell the buyers: ‘If you give us a full-price offer, we’ll replace the roof once the contract is signed,’ ” she said.

Mr. Huggins pointed out that having a long list of repairs is never a good idea, whether a home is on the market or not.

“It’s not uncommon for people to live in a house for 20 or 30 years and put up with things that are not up to par,” he said. “Why not take care of your home while you’re in it so you can enjoy those upgrades yourself?”

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