If you are a home owner thinking about selling your home, there are likely some repairs you’ve considered fixing or renovations you’ve considered undertaking before putting your home on market. You may be wondering what is worth addressing now to gain a higher sales price. While there are no clear-cut answers, it is worth discussing with your real estate agent what the best course of action is before going on market. We have put together some general recommendations that may help. Repairs normally fall into three main categories:
Major Remodel / Renovations
Some sellers wonder if they should spend money on a kitchen remodel or bedroom addition prior to selling – with the hope that the investment will get them a beefier sales price. Careful consideration should be taken when deciding to undertake a remodel project. Cost recuperation can totally depend on your local market, your style of home, your neighborhood, and the type/grade of remodel you decide upon. For instance, if you have a high-end home in a nice neighborhood in a healthy real estate market, it would make sense to make costly upgrades to transform the kitchen, while a fancy upgrade to a mid-market home wouldn’t guarantee a cost return.
It could make sense to spend money when you will propel your home into a different “class” of home – for instance increasing bedroom/bathroom counts or adding a master suite. Remember though – you want to ensure you are building something a buyer will actually want, and you are making sensible upgrades at minimal cost. An attic conversion into a third bedroom would make way more sense than building an addition off the back of your home.
You’ll also want to consider the cost of time and hassle into the equation – it is worth living amidst a 3-6 month remodel to try and moderately increase the value of your home? Ask yourself too why you weren’t willing to spend the time and money to make the upgrades for your own enjoyment. There are likely solid reasons why you didn’t want to remodel on your own time – whether it was lack of energy and resources, lack of vision, or a disdain for home remodel projects.
Some home owners are tempted to cut corners on renovations – thinking that a quick and dirty job will be good enough to get them through a sale. This method can backfire – buyers and their agents can see through poor craftsmanship and cheap upgrades and will steer clear, or actually dictate a lower price point than you had hoped for.
In general, it does not pay to undertake a remodel of the home prior to selling. Most renovations will not pay for themselves when you consider the final sales price, plus dealing with the hassle of the remodel job itself, and any potential issues that come up as a result of the renovation. Remodeling Magazine publishes a “Cost vs. Value Report” each year that analyzes the relationship between remodeling costs and resale value. This can give you a great handle on what types of projects tend to give a positive ROI versus ones that aren’t worth the time and effort.
This category of repair can offer you the most bang for your buck. Most buyers like to feel like they are walking into a well-cared for home that doesn’t leave remnants of the previous owner. A fresh coat of paint, new carpets, and a professional cleaning can go a long way in making a tired home feel refreshed and like-new. The costs for these types of updates are often minimal and, although hard to directly quantify as a recouped cost, can definitely do the work of getting your home sold quickly.
And then there all of those home repair projects you have been putting off during your residence – aging roof, leaking gutters, the un-serviced furnace, or water in the crawl space. Unfortunately a lot of the repairs that fall into this category are a necessity to address. Having these types of faults turn up on an inspection can quickly turn a buyer off and dig-in for another round of negotiations. Chance are if you know about the neglected maintenance items and have been putting them off, a new buyer will want them handled prior to moving in.
Each home, circumstance, and market is different – plan to discuss ideas with your real estate agent and have them do some analysis on what will provide you the highest ROI. The best method of analysis is to look for the sale prices of similar homes in your area. Then do a second search for homes of similar size, age and location that have some of the upgrades you are considering. The difference between those two price points gives you an absolute limit to what you should spend. Don’t forget to factor your time and hassle into the equation. Spending $50,000 and 3 months of your time on a new kitchen that gets you $55,000 more on your sale price is not an appealing return.