Selling a Home
Trying to decide if you should sell your property “as-is”, or invest in repairs, is a big financial decision. You know there are things that can be cleaned up, but that doesn’t mean they are worth your time or money. The benefits of repairs depend on several factors, including the condition of your house and the state of the housing market. In a hot real estate market, homes may sell in days, gathering multiple offers and even bidding wars. In a seller’s market, you can usually get away with fewer repairs before selling.
Many sellers put too much money into fixing up their homes before listing them for sale. Seller’s repair flaws that a buyer might not notice or won’t pay extra for. Also, most “fixer” buyers are willing to do simple repairs such as paint the walls and replace light fixtures. In most cases, they don’t want to rebuild a foundation or move load-bearing walls.
Before you remodel your kitchen and invest in new shingles for your roof, you’ll want to know which home improvements can boost the value of your home and improve the odds of a quick sale, and which will probably be a waste of time and money. A seller’s agent can look at your home and give you targeted advice, which will get you the best results for your circumstances.
Knowing What to Fix
Many sellers put way too much money into fixing up their homes before listing them for sale. Sellers can repair flaws that a buyer might never notice or just won’t pay extra to have fixed. In a hot real estate market, homes may sell in days, garnering multiple offers and even bidding wars. In a seller’s market, you can usually get away with fewer fixups before selling. However, a home that needs repairs will still deliver a lower price in any market. In slow markets, buyers might not even bother to look at a home that needs work. Also, some repairs and home improvements are more likely to pay off than others.
It’s also good to know the condition of competing homes for sale. A competitive market analysis (CMA) offers an overview of recently sold homes in your area. Your agent will be able to provide you with this information to help you get a sense of whether your home offers more, or less than similarly situated homes.
Selling a House “As Is”
When a seller lists a house for sale “as is,” typically it means that they will make no repairs to the property before the sale or offer any credits to the homebuyer to make improvements after the transaction is complete. There are some situations when it makes more sense to sell the house this way. If a home needs a lot of work, beyond a few minor repairs where much of the electrical system doesn’t work, all the faucets leak, it cannot be easily or economically fixed. A coat of paint won’t help. In this case, you might want to just price the house low enough to attract multiple offers from contractors and home flippers.
Who Wants a Fixer-Upper?
Some homebuyers say they want to buy fixer-upper homes, but they’re generally looking for those that require only light cosmetic repairs. That means putting down new flooring to replace that dated linoleum, not changing the structural layout of the home. Buyers who gravitate toward fixer-uppers are those who either don’t qualify to buy a more expensive home or want to make a profit by fixing up the home themselves.
Fixer-upper buyers will discount the price of the home to allow for the repairs, then discount it a bit more for the inconvenience and to make sure the effort is worthwhile and doesn’t come with hidden costs. Most buyers want a home that’s in move-in condition. You can limit the number of buyers who might be attracted to your home by not making repairs.
Return on Investment
Smart sellers will weigh the cost of the proposed improvements against the home’s market value after the repairs or upgrades are completed. Such an improvement might not be warranted if an upgrade won’t provide a good return on the investment (ROI). Before you decide to lift the roof and install skylights in the master suite, know that kitchens and baths carry the highest return.
Other improvements with a high ROI include replacing siding with fiber-cement or vinyl, replacing windows, adding a deck, or swapping in a steel front door. You might also want to take an afternoon to tour other homes in the neighborhood with your agent. Note the condition and amenities in those homes. Compare homes in the neighborhood to yours. If most of them have upgraded kitchens, you should concentrate on fixing your kitchen. These homes are your competition. This doesn’t mean you have to buy designer appliances and tear out the cabinets, but a minor kitchen remodel might be a good investment. Sometimes simply painting cabinets and installing updated hardware can give your kitchen an fresh look.
Minimum improvements to consider making before selling your home include patching holes and cracks in the walls and ceilings and fixing broken appliances and HVAC systems. It’s good to repair leaky faucets, replace broken window glass and repair the roof if necessary. Change any dated light fixtures or ceiling fans. Fix code violations—any serious buyer will have the home inspected. Replace worn or stained carpeting. Repaint dark or marred walls with neutral paint. Replace old drapes and window coverings. You’re best to make a list of everything that’s defective, broken, or worn out. Buyers might wonder what else in the home has been neglected if they spot problems or malfunctioning systems as they tour your home.
Keep in mind that empty homes don’t show as well as furnished rooms, but battered furniture can detract from your home’s appeal. Ask your agent about hiring a stager or consider upgrading your furniture if it’s in bad shape. You can always take the new furniture with you when you go.
Don’t Cut Corners
If you are going to invest your time and money into a home improvement, you’ll want to make sure that the job is properly done. It may seem beneficial to install new kitchen tiles yourself, but if the end result means the tiles are uneven or cracked you might have done all that work for nothing. It is best to speak to your seller’s agent about what flaws buyers will notice in home improvements so you can avoid being frustrated and wasting your time. Some improvements could cost you money instead of making you money if done wrong. They could even make the place look less desirable than before.
Make Sure it’s Functional
The most important consideration in home repairs is to make sure everything works as it should. This is everything from things like doorknobs and locks to bigger stuff like your garage door. Not everything has to be new for a home to be desirable to buyers, but all the functional aspects of the home should be in good working order to garner the best price. A few broken components are all it takes to start driving the price down. This will also help you get ready for the buyer’s home inspection. More home sales fall apart at the home inspection than at any other point in time during a transaction. This means you should know what the most common home inspections issues are and dealing with them beforehand. Some key issues destroy a sale, others won’t.
If you are aware of any specific problems that you do want to fix, it is important to address them before putting your home on the market. You don’t want the chaos of repairs present when the house is showing. Repairs in progress always look worse than they are.