Time to make a bold statement. One that will be confusing at first. Don’t let any agent, INCLUDING ME, tell you they know the as-is value of a home.
Whether someone’s home has deferred maintenance, needs updates, or when someone inherits a poorly maintained house, I am hired many times a year to help clients figure out if they should sell their home as-is or if they would benefit financially by renovating. Is it possible that I don’t know the as-is value of a house?
Would you disagree that the as-is value of a house is as crucial a component in the decision making process as the right scope of work to renovate, the renovation budget and the as-renovated price? YUP!
How can I make the statement that I, or any agent, does not know the true as-is value of a house? Are you ready? NO ONE KNOWS and anyone who implies they do is, well, you figure that part out. Does the possibility exist that someone who claims they know the as-is value are making up a number to induce someone to renovate their home with them??
There is one proven way to know the actual as-is value of a house. You may be shocked to know this one way is not guessing. It’s actually putting the house on the market in its current, as-is condition, and negotiating the best price and terms with interested buyers. To make the process as accurate as possible, price the house well under value expectations to intentionally create a bidding war and multiple offers. I wrote about this last month in my blog “Sometimes I do have a crystal ball”.
Recently a Trustee engaged me to sell a house. Like every seller in this position, he was deciding if he should sell as-is or renovate. While I pushed back, he relentlessly forced me to guess what price I thought the as-is value was. My forced guess was in the upper $800,000s. After going through the process mentioned above, the house sold for $1,050,000 and we had even higher offers.
Every time I’ve helped a client determine the as-is value by actually putting the home on the market, a great deal of offers were received in a certain range. A few offers come in higher than this range, and then typically 3-5 buyers who really wanted the house got even more aggressive. Each time, the price far exceeded expectations, and made selling as-is the best option for the seller.
If I wanted to renovate the house in the above example, I could have guessed and told this seller the as-is price is $875,000. This would have obviously done them an incredible disservice. As does every agent who tells a seller they know the as-is price without going through this process.
This is one of many examples where the as-is value came in much higher than expectations, to the point it didn’t make financial sense to renovate.
What happens if the as-is sales price comes in lower than expected and it would make sense to renovate? Simple:
- Don’t accept any offer.
- Don’t pay the listing agent for this work.
- Take the home off the market.
- Do the renovation.
- Sell when the work is done.
Easy peasy. Twice the work for me, best result for the client. End of story.
This is how a home seller can have 100% confidence that they made the right decision for themselves, their family, or in the case of an inherited home, for their fiduciary responsibility to the Trust and the beneficiaries.