by Wendy Dessler, Guest Contributor
3. Opportunity Cost
Sometimes an action that would certainly make you a sum of money will ultimately cost you more in the long-run. Why? Lost opportunity; or a high cost in relation to the associated opportunity. You pursue one lead and lose the opportunity to pursue another. This is a concept called “opportunity cost”.
To get a better understanding, let’s explore a brief hypothetical. Say you had gigs as a band in Nevada and Montana. The cost of travel is replaced by the cost of the gigs at a profit of 10% after expenses—except, your vehicle experiences wear-and-tear. Unless you build more opportunity through such gigs, you curtail future opportunities from lost vehicular functionality.
So the cost as opposed to the benefit, in the long-run, may not make the long distance gigs worth it. The question is networking—if this can be pursued, maybe the wear-and-tear is worth it. When you’re selling a home, and you’re considering whether or not to go the “as-is” route, you’re in a similar situation.
Spending money to fix up the house will take time, and you might only break even. If that’s the case, then you lose time and opportunities during the remodel. At that point, you might as well just go the “as-is” route, as there is more opportunity through such a tactic than your other options.
2. Conditions Prompting The Sale
If you’re in a declining neighborhood with a home that is structurally unstable, you may be in a spot where you should just cut your losses and sell the property for whatever it will bring. Sometimes your best bet is to sell the land itself.
However, you might be in a decent community that even has the potential for expansion. If that’s the case, then your property may accrue in value even as you fix it up. Still, it will take time, and you may have other “irons in the fire”, as it were, that are more lucrative. In that case, again, going the as-is route makes sense.
On the other hand, you may have been savvy and purchased an as-is property all on your own. If you can get a property that’s basically functional and pursue strategic remodeling, then you can turn an “as-is” property into a profitable estate. This is what’s known as “house-flipping”, and it probably wouldn’t be a trend if some people weren’t successful at it.
Flipping the as-is property you already have can turn a $20k investment into $30k of profit after expenses by adding as much as $50k to the property. At that point the question becomes: do you have funds to invest, or can you get approved for a loan? Conversely, can you repair yourself in a DIY-capacity and fund the remodel process piecemeal?
1. Many things To Consider
Whatever reasons are behind your decision to sell your home, you’ll want to seek consultation to make the best choices. When there isn’t good counsel, plans tend to fail. At the very least, they must be altered. With good counsel, you can make the right preparations. If you’re not sure whether to sell as-is or refurbish, here’s a great place to get started.
Also, talk to any available family or friends you have that may have gone through similar situations. Conduct a “Google” search, and see what kind of tips you can come across. Talk to local realtors. Talk to local insurance agencies. If you’re truly “plugged in” to a community, at some point you need to go to city hall and figure out where the chamber of commerce is.
If a development project is planned near where your property is, and you’ve got some as-is unit there, you could see a decent payday from a corporation pursuing property development. Though selling can be quite straightforward, if you don’t take the time to feel out your particular situation, there’s a high possibility you’ll leave money on the table.
Still, it all boils down to your specific situation. If the property you’re selling can’t really be fixed up in the face of its present neighborhood, well, you might just flog it off for whatever you can. Even so, fortune favors the bold. So ask around, do a little research, and inform your decision to remodel and sell, or just sell, by the data.