Should You Repair or Renovate an Inherited Property Before Selling?
The decision of whether to repair, renovate, or sell the inherited property depends on your ability to balance your budget, schedule, and emotional well-being. While renovating does not necessarily ensure a good return on investment, but if you plan the process effectively, you can balance costs and receive possible returns.
This guide will help you make a better decision on whether or not to repair your inherited property.
Sell Your Inherited Property As Is
Selling an inherited property as is involves selling the house in its current condition, and this typically attracts cash buyers or investors.
- Benefits – It is the fastest way to sell, involves no cost, eliminates project management headaches, and prevents disagreements among multiple heirs.
- Disadvantages – The property sells for less, typically at 10-20% below market value, attracts low-ball offers because buyers perceive renovation costs to be high, and attracts only cash buyers or those who qualify for cash-out financing.
You need to sell your inherited property as is if it requires significant structural issues, such as roof failure, termite damage, or foundation problems. Selling an inherited property is the right option when heirs are in need of cash, or when the renovation costs are too high compared to the profit.
Minor Maintenance Work & Upgrades
This is the middle option that maximizes the aesthetic potential without the cost of remodeling.
- Key Tasks – Deep cleaning, decluttering, painting with neutral colors (light gray or white), replacing old carpets, fixing leaking taps, and repairing drywall holes.
- Benefits – High ROI, relatively inexpensive, makes the house move-in ready, and increases the number of potential buyers who qualify for financing.
- Disadvantages – Requires time, money, and management of contractors.
You can opt this option when house condition is good, but it's outdated, dirty, or cluttered.
Major Renovations
Major renovations include changes in the kitchen, bathroom, or the overall floor plan of the home.
- Pros – Possibility of increasing the selling price and making the home more attractive to buyers.
- Cons – Lack of assurance of making a profit since a 1:1 ratio is unlikely, risk of delayed renovations, and the possibility of disagreement among the heirs regarding the budget.
Major renovation is best for the heirs who have liquid wealth and experience in renovations. It is also a feasible option when the inherited home is in a supreme location where the price is certain to be premium.
Key Factors to Consider Before Deciding
Here are the key factors to consider before making any decision related to inherited property.
Financial & Tax Implications
- Stepped-Up Basis – Most inherited properties will qualify for a stepped-up basis. This means that taxes will be due on the actual value of the property at the time of death, rather than what the original owner paid for it. This can be a big advantage if the property is sold quickly to avoid capital gains taxes.
- Holding Costs – You will be forced to pay taxes, insurance, and utilities on the property while you are renovating it. You may also be forced to pay a mortgage on the property if you decide to keep it.
- Repair ROI – Updating the kitchen can increase the value of the house by 5 to 10 percent. Updating the bathrooms can increase the value of the house by 3 to 5 percent. However, if you over-improve the house for the neighborhood, you may end up losing money.
Time & Effort
- Project Delays – Labor and material issues can extend a 3-month project into 6 to 12 months.
- Distance – Renovating from out of town can be very stressful, causing you to overspend.
Legal & Market Factors
- Probate – You want to ensure that the process will allow for sale.
- Market Type – In a seller’s market, buyers will often want to renovate, making an as is sale more desirable, while in a buyer’s market, move-in ready is critical.
Should we Repair or Sell an Inherited Property?
This table will provide you with recommendations based on a variety of scenarios.
| Scenario | Recommendation |
| Home needs structural repairs (Roof, Foundation, Pests) | Sell As-Is or High-Impact Repairs Only |
| Home is dated but functional | Paint, Clean, Replace Flooring |
| Heirs disagree on spending | Sell As-Is |
| Cash is needed immediately | Sell As-Is (Cash Buyer) |
| Home is located 2+ hours away from heirs | Sell As-Is or Light Refresh |
| You are a seasoned flipper/GC | Renovate to Maximize Profit |
The Must-Do Checklist
If you choose to forego renovating, experts recommend that you should do the following to prevent loss of money.
- Clear out all personal items (estate sale/junk removal).
- Makes it safe/mortgageable (repair electrical, plumbing, or structural leaks).
- Eliminate all odors (replace old carpets and clean heavily).
- Paint all items with a neutral color.
Conclusion
The decision to renovate, refresh, or renovate the property you are inheriting is largely based on your financial objectives, timelines, and stress levels. Although renovating a property may result in more money at the end of the sale, it is unlikely to give you a good return on investment and may result in delays and disagreements among family members. In most cases, a strategic refresh is likely to give you better value for money and return on investment. However, in situations where you are in need of cash and the property is in bad condition, selling it in its current state may be the most financially savvy and least stressful decision.