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I am going to be selling my house soon. It just so happens that the owners of a rental property next door once expressed interest in our home. (In case it's valuable info: They used to live in the rental property next door, and the people who lived in our home two or three owners ago were their great friends who welcomed them to the country.)

Over the past 5 years we have lived here, the house has appreciated, at least on Zillow, from 75k to 92k. I know Zillow is not a gold standard (or even a aluminum standard in some cases, although we paid the Zillow value for this place in an all-cash transaction, borrowing the money from a family member). Realtor.com estimates the value at 103k. We haven't had it appraised and I think there's significant swings in value possible based on whether or not we perform potential upgrades/updates. At the end of the day, I want the highest profit from selling the home, not necessarily just the highest sales price. So as I see it, the equation of interest is sell price minus the costs of improvements and selling.

To sell on the market, I think I will have to do more improvements but I think I would also get a higher price. To sell to the rental owners, I think I might be able to get by with fewer improvements, but consequently not fetch the higher price. However the profit between the two scenarios could be the same. And yet I feel like miscalculations and wrong steps here could cost me thousands.

How do I figure out which step to take next to figure out what to do to net the most profit?

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You decide whether the improvements will result in a net higher price. You also need to figure on how long the house will be on the market and the cost of carrying the home, unoccupied.

Some people would prefer the quickest sale. Others would wait to get the highest price. If you sell to a known buyer, you avoid using a real estate agent. If you plan to sell on your own and avoid the agent, there's a bit of effort dealing with the public, especially those who just want to look at houses with no real interest in buying. (As an agent, I can tell you, there's nothing like talking for nearly an hour, and then figuring out these people are from 1/2 mile away, but just attend every open house in the area.)

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We considered similar big renovations when putting our house on the market. The answer turns out to be pretty simple; unless you do renovation-type work as your day job, or have really good friends in the residential contracting business, sell as-is. You will virtually never get back the full price of bringing in a gen-con to renovate any space in your home; you do that when you want to spend the extra to make your home exactly what you wanted, so you can live in it for decades and get the enjoyment out of it. If you're trying to turn a profit with the renovation, like house-flippers do professionally, you look for easy repairs/renos, buy good-looking but inexpensive materials, and do the labor yourself.

Whether you sell to the market or to a specifically-interested buyer is your call, but I will caution you that a specifically-interested buyer is going to be looking for a deal, or a steal.

When marketing our house, we met with three different realtors. The first one was very overoptimistic about what we could list for (basically assuming that we could get the same price as a fully-upgraded version of our same floor plan with a pool out back). She also had a to-do list a mile long, and my wife and I both noticed that she looked very apprehensive about the house when looking around, even as she reassured us that selling it would be no trouble. We eventually realized why she was so apprehensive, and fired her before we got even halfway through her to-dos, which included major landscaping, new kitchen floors and countertops, etc, which would have cost us thousands and would not have gotten the house price even close to the target.

The second one took a look at our half-finished refinish and told us to stop everything we were doing to update the minor stuff like paint and fixtures, saying we were putting lipstick on a pig; she would market the house to some cash buyers she knew personally, for about 80% of the list price our first realtor quoted, and implied that we should be kissing her boots for finding us a buyer willing to take the house off our hands at all. During the tour, she pointed out "problems" with the house that weren't even there, like foundation issues such as sloping floors, in an attempt to scare us into going with her strategy. We sniffed that out pretty quickly, showed her the door at the end of the initial consult and never called back. This, by the way, is the kind of thing you want to avoid; unless your home is really dilapidated or torn apart with unfinished major renos, it should have decent value on the market and you shouldn't have to resort to a cash buyer looking for a flip or a rental property on the cheap.

Just like Goldilocks, our third choice was just right. He saw all the same comparables, toured our house, and recommended that we offer about $20k less than the fully-upgraded version (but still about $20k more than the second realtor was estimating), targeting a "real" buyer and not an investor or flipper, but at a price that would make the lack of upgrades more acceptable. We finished the paint and finish projects we started, brought in a weekend's worth of scheduled showings, and our house was under contract for full price within 3 days, giving us the extra $20k worth of down payment to put into our new house.

In summary, I highly recommend a realtor, because the one we eventually listed with worked his butt off on the business side while we fixed up the house. However, make sure you find the right one; realtors are ultimately in business for themselves, and their ultimate interest is in getting your house sold and getting you into a new one. That is what gets them paid. Some of them will do it the right way, working the deal with other realtors and their prospective buyers to get you what you need. Others will take the easy way out, at your expense, either giving you bad advice about how to present and price your home so that you end up on the market for 6 months with no offers, or handing your house to their business buddies at a discount.

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