Real estate investors and house flippers often face a big conundrum when selling a home: Sink money into improvements to snag a higher asking price, or list the home in its current condition and hope for the best. In a buyer’s market, the latter approach will often backfire. But what if it’s a seller’s market? In that case, there’s an argument to be made for selling a home as is rather than investing in renovations. And if there’s ever been a time to get away with not improving a home before listing it, it’s right now.
Sellers control the market right now
The coronavirus pandemic has changed the housing market into one that sellers utterly dominate, and low housing inventory is forcing buyers to make a host of concessions, whether they like it or not. As of late July, there were just 1.5 million homes for sale, according to the National Association of Realtors, which marks a 21.1% decrease in inventory from the previous year. That’s also the lowest July supply on record since 1982.
At the same time, mortgage rates have been plummeting to historically low levels, driving buyers to push themselves to get a piece of what little housing inventory had been made available. In August, mortgage demand was 33% higher than it was a year prior, and during the week of Sept. 10, the average 30-year fixed mortgage fell to 2.86% — the lowest measure on record for Freddie Mac’s mortgage tracker. As a point of comparison, at the same time the previous year, the average 30-year mortgage rate was 3.56%.
It’s for all of these reasons that sellers truly have the upper hand in today’s residential real estate market. And given the way mortgage rates have been trending, there’s a good chance that will continue to be the case well into 2021. Furthermore, many sellers are specifically holding off on listing their homes because of the ongoing coronavirus pandemic — a situation that’s highly unlikely to resolve itself in the next few months, unfortunately. As such, real estate investors and house flippers have a solid opportunity to list their homes as is, without putting work into those properties. And that could open the door to serious profits.
The reality is that most home improvement projects don’t offer a 100% return on investment. Yet in a normal market, many renovations would be absolutely necessary in the course of selling a home.
Today, buyers are being backed into a wall. Those who want a chance to lock in a 30-year mortgage at under 3% can’t do so until they find a home to buy, and so they may be willing to accept a home in their price range that isn’t in ideal condition.
Incidentally, it’s not just investors and house flippers who stand to make a killing right now. Regular sellers are also in a position to command top dollar for their homes — though they also face the challenge of needing a replacement home to move into, whereas investors and house flippers do not.
Take advantage of a key opportunity
If there’s ever been a good time to sell a home without putting any work into it, it’s today. There’s a chance buyer demand might wane slightly when winter takes hold, as residential real estate transactions generally tend to peak during periods when the weather is more mild and cooperative. Anyone looking to sell a house as is should therefore attempt to do so quickly. And if buyers don’t bite, there’s always the option to remove that listing, put in a little work, and try again after the fact.
Read More: Is This a Good Time to Sell Your Home As-Is?