For Freddie Mac, repairing is usually the best choice.
“Repair is number one on the list if at all possible,” Montgomery said.
She explained that while many investors may be willing to take a home as-is if the opportunity is right, the GSE’s main focus is split between maximizing value and getting owners into homes.
While Fannie Mae erred on the same side, Chapman recommended a more studious approach, encouraging servicers and agents to do their due diligence before deciding on a repair. There are a number of factors that should influence the decision, he said, including the type of neighborhood, the type of buyer, the chances of vandalism, and the spread of value between an as-is home and a rehabbed home.
“If the difference [between a repaired home price and non-repaired home price] is $20,000, and the repair costs $10,000, that’s an obvious choice,” Chapman said.
Moving away from the topic of structural and safety repairs, the panel also discussed the advantages of cosmetic repairs-those that are intended to showcase a home’s beauty.
Montgomery said she believes that no matter what state the housing market is in, buyers will always gravitate toward homes that are pleasing to the eye.
“I don’t think the impact [of curb appeal] has changed,” she said. “Wanting your house to look like other houses in the neighborhood-that has changed.”
All the panelists agreed on the importance of maintaining the home’s exterior and emphasized the importance of making a good “walk-up impression.” They also offered advice on smaller details that may be overlooked when rehabbing a home-for example, replacing used appliances with fresh machines instead of simply cleaning hard-used appliances.
More than anything, all panelists agreed that rehab goes beyond a few fresh coats of paint.
“Don’t go in and recommend just carpet and paint. You’re really not getting anywhere with a partial repair like that,” Montgomery said. “You’re making decisions that impact the neighbors in these communities.”
[Editor’s note: The Five Star Conference is hosted by The Five Star Institute, DS News’ parent company.]
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