At What Point Is a House Not Worth Fixing?

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Are you looking at a home in need of major updating and wondering, should I even bother renovating it? Is this house not worth fixing?

If you currently live in the house and are thinking of selling, you need to consider whether the house is worth fixing or if renovations could maximize your profit. On the other hand, if you’re buying a fixer-upper property, you need to determine how much work and money you’re willing to put in. Unless you’re Chip and Joanna Gaines, the house may not be worth fixing.

However, as a homeowner, this question gets trickier. What’s worth renovating, especially if you’re planning to stay in the property?

Let’s take a look at helpful parameters to determine if it’s a good decision to fix up the house, and what’s not worth fixing.

When It Costs Too Much to Repair

While the value of real estate property generally increases over time, there may be a point at which the costs of renovations and repairs outweigh the benefits.

Economics professors caution individuals to do a “cost vs benefit analysis” before making any financial decisions. It may sound like complicated mathematical formulas are involved; however, it’s quite a simple equation to calculate. 

In a nutshell, it’s simply money out (costs) versus money in (benefits).

If you’re selling a home, this is a crucial analysis so that you don’t overspend on updates. There will be a point that a home is not worth fixing and you won’t get that money back after selling.

When A Home Reaches a Renovation Tipping Point

Every real estate property has a life expectancy. Over time, things will start naturally deteriorating from age and use.

The cycle will come to a critical juncture where future functionality will require maintenance, and not the light kind. Without a sizable infusion of cash into making these repairs, the property will inevitably venture into a territory appraisers call “obsolescence”. The point of no return, so to speak. 

Questions to Ask to Determine if a House is Not Worth Fixing

If you’ve determined that the house is at the critical juncture of fixing or failing, you need to determine your course of action.

First ask: What needs to be repaired? List all of the areas that need renovation, from greatest to least important, along with the approximate costs.

Second ask: How much can I spend on the repairs? Will I use cash or take out a home equity loan? Determine what financial resources you have available for the repairs and renovations.

Once you’ve determined this information, ask, “If I spend ‘x’ amount on the property, will it benefit my overall returns by substantially increasing the home’s value?”

While your goal may not be house flipping; however, that’s exactly how you should approach this scenario. If you’re planning to sell the house, talk to a Realtor about the home value in the current condition and what value could be gained from renovations.

Think Like an Investor

With this framework of mind, you can remove the emotional ties and rely on purely prudent decision-making to make this tough call.

If you’re planning to sell the home, it’s essential to prioritize renovations that will benefit the sale. While cosmetic updates are fun, the bones of the home are a critical part of the sale. Focus on repairs that may scare potential buyers away.

If you’re planning to remain in the home after fixing it, then you can shift your focus a bit. Prioritize safety and structural soundness, then focus on cosmetic updates. Over time, the value of your home will increase, and you can likely gain back any equity lost in additional updates.

Regardless of the outcome, you “ran the numbers” and did your homework to make the best financial decision for your family. 

Renovate or Relocate

If the underlying conditions are too blighted to ensure any positive value-add, then the most sensible thing to do is move.

However, if you have settled with the idea that you’re not going anywhere, for various reasons, then simply do as much as you can afford to as time goes on. First, focus on severely hazardous issues with the home. After that, a little repair work here and there, some periodical upgrades, and even a new coat of fresh paint will do wonders for a sense of ‘newness’ and curb appeal along the way.

Practical Approach to Fixing a Home

Whatever the case may be, like all priorities in life, approach it from a practical perspective. Make a list of pros and cons, determine the costs, and weigh the benefits. Then make the soundest decision that best fits the interests of you and your family.

If you need help in determining what renovations to complete before selling a home, reach out to an expert real estate agent. Their experience and market knowledge can guide you in making the best decisions for your home and pocketbook.