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Thursday, March 13, 2014

What about making major updates or upgrades before I list?


The 3rd of 12 posts in a series of Frequently Asked Questions about the real estate process from the sellers' point of view.

Answer - Well there are two areas in that question that need different approaches. If there is a major defect, such as major foundation settling that is causing major cracks, I’d say get that fixed or be prepared to make a major concession on price. There are several companies that can give you an estimate for any and all repairs that your house may need repairs, it is important that you know what the costs of those jobs would be, so that you have a firm negotiating position for any price concessions that you may have to make. That is probably another reason to have that Home Inspection done before you list, if you know that there are major issues. 

Other things are really issues of aesthetics. For such things as an ugly tile in the bathroom or kitchen or really bad wallpaper on the walls of a bedroom don’t do anything.  I’d advise that you only fix those things that can be done cheaply and mostly with “sweat equity” (such as re-painting a room). The other items that might fall under aesthetics may cause the buyers to factor in the cost to have them fixed, so you should have some idea what they may cost, but don’t worry about them yourself. Most buyers will come with a list of things that they want to change and that are really their issue, not yours. Aesthetics issues are usually not show stoppers; however, the need for major updates or upgrades, or the need to replace a major mechanical system usually is for all but the bravest of buyers and even they will ask for a big discount on the price to deal with those issues.

Certainly don’t put major money into things like a new kitchen or bath if you are planning to sell. You will not get your money back. It is a common mistake that most homeowners make that they start “adding on” the costs of the improvements that they’ve made over the last few years to what they think they can get for the house. It’s not going to happen. Even the best updates only usually return about 70% of the cost, according to studies done by the remodeling experts. 

The other common mistake that sellers make is thinking that the money that they dumped into a new roof a couple of years back or the new furnace this last year should be considered as updates. They are not updates, they are maintenance that is expected to maintain the old value, not enhance it. New windows may be considered to be an update, but even that is something that most buyers expect that an owner would have done anyway to maintain value. Updates and major remodeling projects enhance value and should be planned into home ownership about every 3 - 5 years.

Click here for some good reading at the How To site on the return on investment for home improvements. Hopefully you made those improvements and updates for your own enjoyment and you had some time to enjoy them. If not, don’t do them now. Get over it and move on.To get a better idea of the potential costs, visit the Home Remodeling site and read their 2013 Cost vs Value Report.

One area that you may also want to address is the outside of your house. Here are some great tips for outdoor projects that do add value. Your lawn and landscaping are also areas that can
greatly improve the curb appeal and value of your house at modest costs. It might be especially important this year, since we are coming off a very harsh winter that may leave you lawn and landscaping looking a bit bedraggled.Here is a great site for advice about grasses that should be used in Michigan and other tips. What I didn’t say is to go out and hire a landscape architect to redo your entire landscaping. Spread some seed, maybe plant some plants and bushes and perhaps get a good professional trimming and cleanup of your landscaping. Bushes that have been allowed to overgrow the hose or walk are turn-offs to potential buyers and simple things to correct.

So, the bottom line is that it is way too late to start doing major updates when you are getting ready to sell your home. It makes as much sense to do that now as it would to stand on a corner giving away $100 bills and getting back $50-60. How long would you do that before the light bulb came on?


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