Should You Sell an Inherited Property ‘As-Is’ or Renovate It First?

Inheriting a home is a complex experience, often intertwined with both cherished memories and the daunting reality of managing a significant asset. It’s a time marked by emotional weight, navigating grief, and untangling family dynamics, all while facing the practical question: what comes next? If the decision is to sell, you will probably be faced with deciding whether to sell “as is” or to renovate it before listing. 

This decision isn’t one-size-fits-all and depends on various factors, such as the home’s condition, your financial situation, the real estate market, and your overall goals. This guide explores the pros and cons of both options to help you make the best choice.

From a buyer’s perspective, inherited homes can appear dated, reflecting past design trends and potentially lacking modern amenities. Moreover, deferred maintenance – repairs neglected over time – is a common issue. Leaky roofs, outdated wiring, and aging HVAC systems can significantly impact a property’s value and marketability. Beyond the practicalities, there’s the emotional hurdle of letting go of a home that holds a lifetime of memories.

This blog will guide you through the critical factors to consider when deciding whether to sell an inherited property “as is” or invest in renovations before listing it. I’ll delve into assessment, planning, and execution, aiming to equip you with the knowledge to make an informed choice, whether you’ve inherited a well-maintained home or one requiring substantial work.

What Does It Mean to Sell ‘As-Is’?

Selling a property “as-is” means putting it on the market without making any significant repairs or updates. Buyers will be purchasing the home in its current condition, flaws and all. The seller discloses known issues but does not negotiate on repairs or upgrades. This option is often attractive when a quick sale is paramount, such as in cases of urgent financial needs or when heirs reside out of state.

Buyers attracted to “as is” properties are typically investors, flippers, and bargain hunters. These buyers often offer cash, facilitating a faster closing process. However, these offers usually come with substantial discounts, reflecting the cost of necessary repairs.

The negotiation process for “as is” sales can be challenging. Buyers will meticulously factor in repair costs, leading to lowball offers. A home inspection is crucial in these transactions, providing a detailed assessment of the property’s condition.

It’s imperative to disclose all known defects, even when selling “as is.” While you can expedite the sale and avoid holding costs like mortgage payments, taxes, and insurance, attracting traditional buyers seeking move-in-ready homes can be difficult. Furthermore, “curb appeal,” the crucial first impression, is often diminished in “as is” sales.

What Does Renovating Entail?

Renovating before selling can significantly enhance your property’s value and appeal to a broader buyer pool. Focus on renovations that offer the highest Return on Investment (ROI), such as kitchen and bathroom updates, new flooring, fresh paint, and curb appeal enhancements.

Curb appeal improvements can include landscaping, painting the front door, or replacing worn hardware. Addressing deferred maintenance, such as roof repairs, HVAC servicing, and plumbing and electrical upgrades, is also essential.

Create a realistic renovation budget, including a contingency fund for unexpected expenses. Obtain multiple contractor quotes and manage timelines effectively. Consider current design trends and choose neutral colors to attract a diverse range of buyers. Ensure all renovations comply with local building codes and permits.

Renovations, particularly extensive remodels, can be stressful and time-consuming. However, strategically planned renovations can yield significant returns. For example, a recent client initially sought cash offers from investors for a dated but structurally sound home. Investor offers ranged between 65% and 75% of the desired price.

Instead, a modest $20,000 renovation budget was allocated, which increased to $24,000 as the project progressed, due to adding new lighting, doorknobs, hinges, and other small improvements that created a great first impression. While the kitchen was improved, the bathrooms remained largely untouched. Ultimately, the home sold for $70,000 more than the initial desired price and $158,000 more than the highest investor offer. This demonstrates that even a limited renovation budget, when strategically applied, can yield substantial returns.

Factors to Consider When Deciding Between Selling ‘As-Is’ or Renovating

1. The Condition of the Property
   The condition of the inherited home plays a crucial role in your decision:
   • Sell ‘As-Is’: If the property requires extensive repairs or is in disrepair, selling it as-is may save you from a lengthy and expensive renovation process.
   • Renovate: If the home is structurally sound but outdated, making cosmetic improvements can significantly boost its marketability and price.
2. Your Financial Situation
   Evaluate your financial resources:
   • Sell ‘As-Is’: If you don’t have the budget to invest in renovations or can’t afford to hold onto the property for an extended period, selling as-is can provide a quicker payout.
   • Renovate: If you have the funds to cover renovation costs and can wait for a potentially higher sale price, renovating will almost certainly yield a greater profit.
3. The Real Estate Market
   Consider current market conditions:
   • Hot Market: In a seller’s market, where demand outpaces supply, buyers may be more willing to purchase a home as-is.
   • Buyer’s Market: In a market with more inventory, renovated homes tend to attract more attention and competitive offers.
4. Time Constraints
   How quickly do you need to sell the property?
   • Sell ‘As-Is’: If you’re under pressure to sell quickly, such as to pay off debts or split proceeds among heirs, selling as-is minimizes delays.
   • Renovate: If you have the time to oversee renovations, the effort may pay off in the long run.

Pros and Cons of Selling ‘As-Is’

Pros

1. Faster Sale
   • Selling as-is eliminates the time required for repairs, allowing you to put the property on the market immediately.
   • This is particularly beneficial if you’re in a hurry to settle the estate.
2. Lower Upfront Costs
   • You won’t need to spend money on repairs, upgrades, or staging.
   • For sellers with limited funds, this can be the most practical option.
3. Attract Investors and Cash Buyers
   • Many investors and house-flippers actively seek as-is properties, offering cash deals that speed up the closing process.

Cons

1. Lower Sale Price
   • Selling as-is often results in a lower price since buyers factor in the cost of repairs they’ll need to undertake.
   • You may also receive fewer offers, as some buyers are deterred by homes requiring significant work.
2. Limited Buyer Pool
   • As-is homes appeal primarily to investors or buyers willing to take on a fixer-upper, reducing your potential market.
3. Potential Negotiations
   • Even in an as-is sale, buyers may request credits or price reductions after a home inspection reveals significant issues.

Pros and Cons of Renovating Before Selling

Pros

1. Higher Sale Price
   • Renovated homes tend to sell for more, as buyers are often willing to pay a premium for move-in-ready properties.
   • Strategic renovations, like updating kitchens or bathrooms, often yield high returns on investment.
2. Broader Appeal
   • A modernized, well-maintained home attracts more buyers, increasing competition and potentially leading to better offers.
3. Faster Sale in Certain Markets
   • In a buyer’s market, renovated homes stand out, reducing the time the property sits on the market.

Cons

1. Upfront Costs
   • Renovations require an investment of both time and money. Even minor updates can add up, and major repairs can be costly.
2. Delays in Selling
   • Renovation projects can take weeks or months, delaying the sale of the property.
3. Risk of Over-Improvement
   • If you over-invest in renovations, you may not recoup the costs in the sale price, especially if the home is in a neighborhood with lower property values.

How to Decide? A Step-by-Step Approach

Step 1: Get a Professional Evaluation

• Hire a home inspector to assess the property’s condition.
• Obtain a comparative market analysis (CMA) from a real estate agent to understand the potential sale price of the home as-is versus after renovations.

Step 2: Calculate Renovation Costs and ROI

• Research the cost of necessary repairs or upgrades.
• Estimate the return on investment (ROI) for specific projects. For example:
  • Kitchen remodels often yield an ROI of 50–75%.
  • Fresh paint and landscaping can provide a significant boost for minimal cost.

Step 3: Evaluate Your Timeline and Resources

• Do you have the time, budget, and patience to oversee renovations?
• Are there family members or professionals who can assist with the process?

Step 4: Consider Emotional Factors

• Selling as-is might be emotionally easier if renovations feel like too much of a burden.
• Renovating could be a way to honor the property and create a fresh start for its new owners.

Renovation Projects That Offer the Best ROI

If you choose to renovate, focus on cost-effective updates that enhance the home’s appeal without overextending your budget.

1. Curb Appeal
   • Landscaping: Add fresh mulch, trim bushes, and plant flowers.
   • Exterior paint: A clean, modern color can make a significant impact.
   • Front door replacement: A new or painted door enhances the entryway.
2. Kitchen Upgrades
   • Replace outdated appliances with energy-efficient models.
   • Reface cabinets or add new hardware.
   • Install a new backsplash or countertops if the budget allows.
3. Bathroom Updates
   • Replace old fixtures with modern ones.
   • Re-caulk or re-tile showers and bathtubs.
   • Update lighting and add new mirrors for a fresh look.
4. Basic Repairs and Maintenance
   • Fix leaky faucets, squeaky doors, or broken windows.
   • Address any safety concerns, such as electrical or plumbing issues.
   • Ensure the roof, HVAC, and foundation are in good condition.

Case Studies: When Each Option Makes Sense

Case 1: Selling ‘As-Is’

Scenario: The inherited home is older, with significant structural issues like a leaky roof and outdated wiring. You don’t have the funds or time to invest in renovations.
Outcome: Selling the home as-is to an investor or house-flipper minimizes financial strain and provides a quick resolution.

Case 2: Renovating Before Selling

Scenario: The home is in a desirable neighborhood but looks dated. Cosmetic upgrades like painting, updating fixtures, and landscaping could make it more competitive in the market.
Outcome: After minor renovations, the home sells quickly and for a higher price, recouping the costs and increasing your profit margin.

Alternatives to Consider

If you’re undecided, explore alternative options:

1. Partner with an Investor
   Some investors are willing to purchase as-is properties and complete renovations themselves. You may even negotiate a profit-sharing agreement.

2. Sell to a Cash Buyer
   Cash buyers often specialize in purchasing homes as-is, offering quick sales without the need for repairs or staging.
3. Rent the Property
   If the home is in livable condition, consider renting it out. This option provides ongoing income and allows you to defer the renovation decision.

Professional Guidance: Navigating Complexity

Consulting with professionals is essential. A knowledgeable real estate agent can provide market insights, pricing, marketing, and negotiation expertise. Choose an agent with probate experience, as they understand the specific legal and financial considerations of estate sales.

Select reputable and qualified contractors, checking references and licenses. Obtain a pre-listing home inspection to identify potential issues. Work with legal and financial advisors to navigate the complexities of probate and taxes.

Ultimately, the decision to sell “as is” or renovate depends on your individual circumstances. There’s no one “right” answer. By carefully considering market conditions, property condition, budget, and timeline, you can make an informed choice that maximizes your return and minimizes stress.

Remember, this process can be complex, but you don’t have to navigate it alone. As a Certified Probate and Estate Expert, I’m here to guide you every step of the way. Whether you decide to sell “as is” or renovate, having a knowledgeable professional on your side can make all the difference.