Preparing to sell a home can be daunting. Popular shows like "Fixer Upper," "Flip or Flop," and "Property Brothers" make it seem like you have to spend thousands of dollars and make renovating a full-time job to prepare to put your house on the market. While real estate flippers do frequently make money doing cosmetic renovations on homes and reselling them, these people are professionals who have spent decades building up their own skillset, knowledge base, and network in order to be successful.
The average homeowner getting ready to put their home on the market won't see a huge return on investment (ROI) for many of the biggest home renovations, like kitchen remodels. Even the most popular fixes, like repainting your interior and exterior, offer only a 51% ROI according to an analysis done by real estate agent referral company Homelight.1 For homes with neutral colors in good condition, repainting is even less profitable. Our conventional wisdom on what is worth fixing is often skewed in favor of spending more money and time than is necessary.
Consult a Real Estate Agent Before Making Repairs
No matter your market, there are several things everyone should do to get a quick sale. You should make sure your home is clean, decluttered, staged to some degree, with the highest curb appeal you can manage.
A local, experienced real estate agent should know the market conditions in your area and have a good idea of what repairs are necessary to get your home in line with comparable sales at your desired price.
Ask your agent for a Comparative Market Analysis (CMA) so you can see what other homes are selling for. If everything on your CMA at your desired sale price is in a condition similar to yours, you may not need to do any repairs before listing. If everything on your CMA is much more updated, do some estimates to see the cost in money and your time it would take you to get your home to the sale price you need. Oftentimes, the cost of updates won't be recouped in the sale.2
Take your agent's suggestions on repairs with a grain of salt. Real estate agents are paid commissions based on the sale price of your home. If multiple upgrades cost you $200,000 and increase the sale price by $100,000 that is a bad investment for you, but a big jump in commission for your realtor. Make sure you are working with an agent that keeps your best interests in mind.
Don't Do a Major Renovation
While many costly upgrades can increase the overall home sale price, depending on the project, owners can also recoup a high percentage of the value in the increased sale price, according to the National Association of Realtors (NAR).2
In the table below, using estimates from the 2019 Remodelling Impact Survey, the most recent year available due to COVID, remodelers estimated the cost of certain projects and realtors estimated the cost recovered in the sale price of the home.
Most big home upgrades simply don't recoup their cost. If you are dying to renovate your bathroom, do it early on so you can enjoy your renovation. It won't be financially worth it to do right before selling. (From the National Association of Realtors.)
Don't Start a Task You Can't Finish
Home repairs are frequently more expensive, take longer, and need more skill than most people expect. With supply chain issues and a tight labor market as a result of the coronavirus pandemic, it is harder than ever to finish a home improvement project on time and under budget.3
The Federal Reserve Bank has been tracking delivery time data for the manufacturing sector in New York, Texas, and Philadelphia and has seen an increase in some areas of 300% over pre-pandemic timelines.4 That means that you're not just waiting for your appliances to get to your local store from the warehouse and then waiting for an installer, you're also waiting 300% longer for the materials to even arrive at the manufacturer to make your appliance.
This means that you should not go into the demolition phase of any repair or upgrade until the items and tools you need to finish your project are physically in your home. It is better to keep the 1970's shag carpeting than it is to tear it up and expose stained floorboards because the 2,000 square feet of hardwood you ordered six months ago still hasn't been produced or is sitting on a ship outside the Port of Los Angeles.
Don't Fix and Replace with Trends
Replacing broken or damaged things like light fixtures, faucets, cabinet hardware, and so on can quickly change the appearance of a home and help it sell quickly or even appraise for more. Repainting a room, door, trim, or cabinetry can also provide a quick facelift. However, be sure not to replace anything with something too obnoxious or trendy.
What is currently trendy for a specific slice of the population may be extremely off-putting for others. Keep your population of potential buyers as broad as possible by picking neutral colors and common fixture styles that can appeal to everyone.
Should I Sell My Home for Cash?
While it is more convenient, typically when you sell your home for cash you are accepting an offer from a buyer that is subtracting any fixing up expenses and then offering 75% of what they expect to sell the home for. Doing whatever cleaning, decluttering, and fixing you have the time and money to complete while listing your home on the market will most likely net you more money than selling for cash.
What Do I Have to Fix at a Bare Minimum?
If you are able to, you should fix anything that is a significant safety issue and would cause your home to fail inspection. Any major leaks, infestations, sewage issues, or electrical hazards should be repaired before putting your home on the market, unless you intend to sell for cash.
Should I Stage My Home?
Yes. Staging a home can cause your home to sell quicker and for more. However, staging doesn't necessarily mean hiring a professional staging service. Cleaning and decluttering are part of staging and need to be completed for moving anyways, so do it before listing photos are taken to have the greatest positive impact on your sale.
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