Custom newsletters produced for the mortgage and real estate professional.

A few years ago, the real estate market was so hot that no matter what some sellers did—either putting money into home renovations or simply listing it “as is”—they sold their home without any problem at all. Very often a seller was able to sell their home within the first week and sold it without a home inspection.

Unfortunately, those days are gone.

Today, sellers are fretting more than ever over listing their homes and the big question is this: Should you make renovations to your home before you put it on the market or should you initially list it at a lower price and not spend the money for upgrades? Although there’s no simple answer (even most experts disagree), each option has its benefits. Yet when all is said and done, a compromise is probably your best bet.

Yes! You should renovate before putting your home on the market. If your home is definitely in need of upgrades, spending the money makes sense. If you are considering any major renovations, you’ll want to have your real estate agent provide you with information about houses in your area in terms of what the “norm” is (number of bathrooms, types of kitchens, average age of homes, etc). If your home is inferior to other homes on the market in your neighborhood, take the plunge and do any needed upgrades. However, be careful that you don’t go overboard. If your renovations are over the top your home may end up being too pricey for your neighborhood.

No! Instead of making upgrades, list your home at a lower price. In many cases, you might not be able to recoup your remodeling costs when it comes time to sell. Also, if you’re worried about your house sitting on the market longer than you want it to, you may be better off if you forgo any major renovations and instead concentrate on listing your home at a competitive price. This doesn’t mean that you need to under price your home, however. You just need to price it according to what the current market will bear—and according to the current value of your house in its current condition. Once again, your real estate agent can help you in this area.

The smart thing for you to do may be a combination of remodeling and lowering your list price. Making smaller upgrades to your house—to bring it in line with similar houses in your area—is usually a good idea if there’s a wide discrepancy between your home and other homes. Also, you should always do minor cosmetic upgrades such as painting, carpet cleaning and general landscaping before putting your house on the market. In terms of your list price, make sure you list your home at a fair and competitive price—whether or not you make any renovations.