Considering selling? Planning to sell a house you own? If so, it’s probably occurred to you—or even hit you squarely in the gut with urgency—that you should do everything possible to maximize not only your profit from the sale but also ensure the quickest possible sale, the smoothest transaction, and the fewest possible pitfalls.
You achieve all of the above by offering something someone else really wants and being able to present it at a great price.
Sounds easy, right? Well, the closer you look, the sooner you realize the trick: spending your time and money efficiently and effectively. So you ask yourself,
Should I renovate before selling my house?
1/1,000 = 0.01%
It can be illustrative to consider extremes. If you were to pay $200 per gallon for gold-flaked purple high-gloss paint and smother it throughout the living and dining rooms, you might find one out of a thousand prospects who would go to great lengths to buy your house.
This brings up one of the most important maxims I’ve learned as a real estate broker:
- Assume prospects have no imagination whatsoever.
How many home and garden reality television shows have you watched where clients remark about how ugly the paint is or the landscaping, while walking right past a swimming pool or an open view of the water? Did you imagine the real estate agent smacking their head, too?
As a buyer of real estate, to make the most of your time and money, you must distinguish what you can change and what you can’t—and hope someone grants you the power to know the difference! As a seller, though, you must assume buyers don’t have this ability because a large percentage of the public—at least those who actually look at homes—seem not to. No insult, just a fact.
999/1,000 = 99.9%
So, rather than gold-flaked purple, imagine dividing the walls into two tones of taupe with crown molding and a chair rail. Now you’ve inspired 999 out of those 1,000 prospects to buy rather than just one. This is called universal appeal, and it changes all the time. Reality television, a savvy real estate agent, and most of all, a full-time professional home stager, decorator, or designer, will keep you up to date on what’s hot and what’s not.
Add to that the basic economics of buying low and selling high, and we can now answer the question posed by this article: Should I renovate before I sell my house? It will depend on:
(a) Universal appeal
(b) Profitability
There is data available on which renovations are most effective. Before we list statistics, consider the following:
- CURB APPEAL FIRST. If the outside looks bad, they may never even come see the inside!
- FIX THINGS THEY DON’T WANT TO FIX. Buyers might be willing to roll up their sleeves and landscape, but they’re less excited about replacing toilets or sinks.
- WHEN IN DOUBT, GIFT IT OUT. While not my first recommendation, if you’re pressed for time, you can offer a home supply store gift card instead of making renovations. But be sure to announce this clearly, whether in pictures or in person, before they see the trouble-spot the gift card is meant to fix.
Specifics
From cheapest to most expensive:
- CLEAN. Ever hear someone rave about a used car that’s really clean? Cleanliness is a virtue. Clean and organized alone can accomplish a lot with very little cost, but you’d be surprised at the effort involved! House cleaners really earn their pay and are a worthwhile investment if you’re selling your home. Nothing will scare buyers away faster than a dirty house.
- PAINT. Especially if you do it yourself (DIY!), painting can be one of the most cost-effective improvements you can make. It’s relatively cheap and can make your home appear fresh and clean, while also taking years off its appearance. Bright, subdued yellows tend to give impressive results. Choose colors carefully, though! A thorough consultation with a paint expert or a real estate agent is well worth your time if you’re unsure.
- REPLACE OBSOLETE MAJOR COMPONENTS BUT DON’T OVER-IMPROVE. If the roof, kitchen, bathrooms, air-conditioning, or windows are in poor condition, a renovation could make your life easier and ultimately enrich your home’s value—but proceed with caution. Rather than focus on universally applicable upgrades like replacing siding or building a deck, prioritize problem areas of the home for potential renovation. For example, a sagging or leaking roof should take precedence over renovating an otherwise acceptable bathroom. If your windows are cracked or damaged, these crucial elements need fixing before putting the home on the market. The experts at Sparvinduer.dk can help refresh your windows.
I’ve seen sellers make the big mistake of upgrading a kitchen while leaving a bad roof. Some improvements generally pay off better than others, but it depends on your home’s condition. The formula is below.
Major Renovations
Try to get wholesale rates for the work. The best way to do this is by asking for a dozen bids—yes, a dozen. Half of them may not show, two will be ridiculous, two will be moderate, and two will lowball. Don’t always go with the lowball offers!
By the end of the bidding war—and make sure to let them know you’re getting multiple bids—you’ll be talking like a pro and can make a decision you trust.
The Formula
Here’s the real gem of advice: ask a real estate agent, or several, and don’t just ask whether you should make renovations. Ask them to work out this formula:
“What is my probable current home value range now, and if I invest $10,000 in a new roof, what will the value range be then?”
If the answer is at least $10,000 more and the roof was bad to begin with, go ahead with the improvement. Don’t make improvements just for the sake of it—make them to fix problem areas of the home. When liabilities turn into assets, you get the most bang for your buck.
If you’re interviewing real estate agents, this is an excellent hands-on question. Get several opinions. It may be worth paying an appraiser $50 for an opinion like this before making such an investment. The list above also ranks improvements by their obviousness. For example, cleaning and painting should be a given, but major renovations require more careful consideration.
Major, Major Renovations
With regard to significant renovations such as room additions, consider the values in your neighborhood. Bringing a three-bedroom home up to a four-bedroom home may not pay off if your neighborhood is full of other three-bedroom homes. However, it could be worth it in a neighborhood of four-bedroom homes. In short, this means:
- Avoid over-improvements.
Your neighborhood is the limiting factor. Over-improving can backfire, especially if your home ends up priced too high for the area. Why would anyone pay $600,000 for a house in a $500,000 neighborhood when they could buy a similar home for the same price in a $600,000 neighborhood? Over-improved homes tend to take longer to sell and are harder to appraise and finance.
In addition to (a) Universal appeal and (b) Profitability, there’s also (c)—the intangible benefit of an investment in the house that may not reap as much money as you put into it, but could increase the appeal of the house and speed up the sale.
When appeal is high, the transaction is likely to go more smoothly. Here are a few bonus maxims:
- People buy on emotions.
- Women buy houses.
- Men pay for houses for women.
Maybe this is old-fashioned, chivalrous, or even sexist, but you can call me all of those things until you receive your proceeds at closing (smile).
