When inheriting an older house that needs significant repairs, what are the pros and cons of renovating before selling versus selling as-is? How can someone determine which option is more financially beneficial? Please share some tips if you ever go through this situation.
You didn’t indicate how many beneficiaries were part of the inheritance, so I will assume that its just you.
Are we talking about actual repairs here? Leaking roof, broken HVAC, failing hot water heater? Or are we talking about cosmetic renovations? Updating the kitchen and baths, replacing carpet, etc…
My recommendation is to sell it as-is. People greatly underestimate the amount of time and money it takes to renovate. Skip the ‘we buy ugly houses’ type of people and list it with an agent on the MLS to get it exposed to as many people as possible. There are rehabbers, flippers and handymen always looking for opportunities. Also first time buyers looking for a good price on a house where they can move in and fix it up over time.
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I’m not a lawyer or realtor, but I did inherit a fixer-upper townhouse that was about 75% fixed up. It was a no-brainer to finish the rest in a few months and put it on the market.
For your situation, I have 2 comments, but do your research to see if what I say actually applies. 
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when you sell as is, buyers will OVERestimate what it might cost them to fix and lower their offer accordingly. If you don’t care about $, then fine. You could get a higher offer if you fixed the important things at your convenience when you can, but that’s effort and expense on you. The most expensive repairs are the ones done by realtor’s contractors urgently to meet a closing deadline. So if you want more money, hire contractors yourself when you’re not in a rush. If you just the least hassle, sell as is. People understand.
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since this old house you’re inheriting is not your primary residence, it is subject to capital gains (or loss) taxes. Assuming you inherited upon death and weren’t put on the deed while original owner was still living (bad idea), then your cost basis is the value of the house on the date of death plus improvements you make if any plus costs to sell the house. Repairs such as replacing the old water heater with a new one and replacing the old carpet with new carpet don’t count. Adding a shed in the backyard when there was none before is an improvement and can be added to your cost basis. Costs of selling the house include realtor commission, title and other fees you’d have to pay to sell to any buyer, but not repairs requested by your buyer.
Good luck!
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I would say get the house inspected so you know exactly what repairs/maintenance is necessary, and which are desirable/cosmetic. Then get several estimates for each of these two categories. Compare the costs for required repairs vs the cost for selling the house without to see whether that part is worth it.
For cosmetic repairs, most purchasers will want to make their own choices on colour, style, and even material (replace carpeting with new carpet, or perhaps change to some variety of hard flooring). Do repair egregiously damaged cosmetic things such as holes in the walls, marked up walls, tall weeds in the yard, etc.
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