Renovating Before Selling - Worth it or Not?
If you are preparing to list your house for sale, you may be wondering if the financial reward will be worth the time, effort and money to fix up things that are in disrepair or that are dated. The answer to that question depends on a myriad of circumstances such as the current real estate market, the condition of competing inventory and whether the renovations that need to be made generally provide a return on investment.
Some home buyers are looking to purchase a "Fixer Upper". They are looking for properties priced to sell, perhaps because they don’t qualify for more expensive homes or maybe because they want to make a profit by fixing the home up themselves. Most fixer buyers want to do simple repairs such as painting walls, replacing light fixtures and putting in new carpet. Only a few want to take a house down to the studs and completely redo it. These potential buyers will want a price for the home that will allow for all the repairs, the inconvenience of doing the work, and often a bit more. For example, if a home is worth $200,000 fixed up but needs a new roof, and the roof costs approximately $10,000, a buyer most likely will not offer $190,000 for this home. The reason is that they can probably find a similar house that already has a new roof for $200,000 and save themselves the headache of replacing it themselves. A buyer in this situation might offer $175,000 or less, in which case it would make more sense for the seller to replace the roof and sell it for $200,000.
It’s important to note that many buyers are looking for "Turn Key" homes. They fear having to make major repairs because they might be costlier than anticipated or other problems might be revealed. Even if the price is right, homes listed for sale in “as is” condition might not attract as many buyers.
However, before doing major renovations, there are many things to consider. Smart sellers will research what their home’s market value will be once improvements are made and compare it to the cost of the renovations. If an upgrade won’t provide return on the investment, it probably doesn’t make sense to do it. Knowing the condition of your competition is helpful. For example, if other homes for sale in your neighborhood all have modern kitchens, it might make sense to update yours. This doesn’t mean you should tear it down and start from scratch. Often a minor kitchen remodel will suffice. Also, keep in mind that kitchen and bathroom remodels are known to bring the best return on investment.
Start by making a list of the things in your home that are dated or in disrepair and then prioritize. Here is a list of 10 minimum improvements to make before putting your house on the market:
- Patch all holes and cracks in walls and ceilings.
- Fix all appliances and HVAC systems.
- Repair leaky faucets.
- Replace worn carpeting.
- Repaint dark or marred walls in neutral colors (not white).
- Replace broken windows.
- Repair the roof.
- Change dated light fixtures/ceiling fans.
- Replace old linens/window coverings.
- Fix any code violations.
If your real estate market is a sellers’ market and homes are moving quickly, you can get by with fewer fix ups, however a home that needs repairs will still deliver a lower price. If it’s a buyers’ market, people might not even be willing to look at homes that need repairs. Sandra Nickel and her Hat Team of Professional Realtors can help you understand the current market in Montgomery, AL so that you can make informed decisions about whether to sell your house “as is” or not. Give them a call today at 334-834-1500!
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