If you are considering selling your home – independent of the reason for selling, it is likely you will encounter an all-too-familiar dilemma that challenges many home sellers: does it make sense (fiscal or otherwise) to renovate the home you are about to sell?
Overall, home sellers typically have two primary objectives when faced with the renovation before selling dilemma:
- To strategically attempt to maximize the home’s sales price.
- To make the property more salable to potential buyers.
So, how does one decide if a home renovation before a sale is a smart move? And, if renovations are in your future, how does one determine which renovations offer the best ‘bang for your buck’ relevant to your return on investment?
The Dilemma - To Renovate [before selling] or Not?
To solve this dilemma, you should consider a number of relevant variables.
With regard to the subject property and its market:
- How does the competition shape up?
- Does demand for homes currently outpace supply?
- Do buyers prefer fixed-up homes to fixer-uppers in that particular neighborhood?
- How much renovation work will need to be done? What is the estimated cost of renovating?
- What is the estimated return on the renovation’s investment?
- Is it possible for the renovations to happen while the seller resides in the property?
- Does the homeowner have the skill to complete the project as a do-it-yourself project?
- Plus, a host of other potential factors.
Posing these questions will help homeowners refine their thinking as they consider if more potential homebuyers want to purchase their home with renovations. Or would it be imprudent to assume a seller could actually know what will drive a potential home sale without knowing the buyer?
Where Should You Start?
Start by recognizing (and listing) each defective or worn-out issue. Pay particular attention to ‘easy to spot,’ noticeable issues or systems that are on the blink because those issues (even if minor) will likely cause potential purchasers (if not their licensed representatives) to wonder what else might have been neglected but is not visible. Unless a home is being marketed as a fixer-upper or ‘as-is sale,’ common sense dictates that a home listed for sale should never have...
- Cracks or holes in the walls or ceiling.
- A broken HVAC system.
- Cracked glass or leaking faucets.
- Code violations, to name a few.
And remember, most serious (and wise) homebuyers will choose to have the subject property professionally inspected, which means that major and minor issues will be revealed during a professional home inspection.
Size Up the Competition
The purpose for home sellers to size up the competition is to help define what most potential homebuyers expect for your home and its competitors. Most seasoned agents will advise that kitchen, and bath renovations typically generate the greatest return on a homeowner’s renovation investment. However, ultimately, it is up to the homeowner to carefully weigh the expense and cost of proposed renovations against the property’s value, after the renovations are complete.
Increase the Value of your Home
While strategic renovations are often one of the most effective ways to increase your property value – especially before selling, keep in mind that renovating requires homeowners to layout the upfront costs to renovate. This essentially means that homeowners must have access to the funds needed to complete the renovation. Without the necessary funds, the renovation before selling dilemma simply becomes an intellectual exercise that never gets implemented.
DIY-ers May Make Things Worse
Poorly installed or cheap repairs simply do not add value. So, if you decide to forgo the use of a professional contractor, be sure you have the skill required to install items properly. Some real estate professionals advise that while new tile should be an appealing factor, improperly installed tile may impact a buyer’s decision, as they see it as yet another renovation project (despite its size) to be redone.
Smart Home Selling Ideas That Truly Make Sense
- Take care of the major issues first. This would include repairing any issues that may prevent a mortgage approval, like a plumbing, roof, or heating issue, for example.
- Make the property sparkling clean and remove clutter.
- Take advantage of the easy upgrades you can do yourself – update a light fixture or swap out new cabinet handles. Painting the trim instantly increases the current paint’s contrast, for example.
- Stage your home as a way to make a great first impression, which is especially important in today’s modern market as buyers often have a glimpse of the home’s interior long before they tour the home in person. Staging allows a professional to optimize a home’s character, space, and flow – showcasing the home’s most salient and appealing features.
The decision to remodel a home before selling is strictly a business decision. Home sellers tend to make the best decisions when they do so unemotionally. As such, it is best to engage a professional’s help and advice based on sound financial data and analysis. Talk to our Home Renovation Contractors today!