When I’m interviewed by prospective clients about listing and selling their home, one of the most common questions they ask me is whether they should make a certain improvement or repair or replace a particular fixture or appliance.
This week I’d like to share with you my response to such questions.
Periodically, the National Association of Realtors does a “cost vs. value” analysis which determines the return on investment (“ROI”) for different renovations or improvements that a homeowner might make. Consistently, the ROI is under 100%.
If you’re not going to increase what you get for your home by at least what you spend on an improvement, why do it?
Homeowners will often make expensive improvements when they want to sell their home. My advice is to make only those improvements that you would enjoy yourself, and make them sooner, rather than later so you have an opportunity to enjoy them. Of course, you’ll want to make these improvements with an eye toward whether a future buyer might like them, but make them to enjoy yourself since, when the time comes to sell, almost no improvement you have made will return more dollars than you spent on it.
My advice to homeowners who have reached the point of selling is to concentrate on eliminating negatives instead of making improvements. Look for the things in your house which are bound to create a negative impression on a buyer. I call them “eyesores.”
For example, replace worn carpet, especially older shag carpets. If the carpet is okay but rippled, have the carpet stretched. Refinish hardwood floors that show obvious wear. Repair and repaint damaged walls.
Replace your kitchen counters only if they would draw a negative comment in a visitor’s eye, but not just because they aren’t updated. Formica countertops of a neutral color that are in good condition may be outdated, but they rarely diminish a buyer’s interest in your home.
Does your bathroom have those 1970’s (or earlier) fixtures with matching pastel colors? Replacing them will probably not give you a return on your investment.
Of course, these are generalizations, and you really should have a set of “fresh eyes” to give you advice on your floors, walls, kitchen and bathrooms. We have 10 broker associates at Golden Real Estate and often I will bring one of them with me on the first meeting with a prospective client. Two of my broker associates are staging consultants and one even has a degree in interior design, so they can provide valuable insight.
What if one of the issues is something that is not obvious but will become an inspection issue, such as an extremely old furnace or aluminum wiring that hasn’t been mitigated?
These hidden defects need to be disclosed but it’s not typically necessary to address them in advance. Instead, save them for possible use as negotiating points when responding to inspection demands.
Let’s say that your buyer submits an inspection objection asking you to replace the 20-year-old furnace (which is working okay but beyond its useful lifespan) and to “pig-tail” your aluminum wiring. If you haven’t mitigated the aluminum wiring before listing, you can respond to the buyer’s demands by saying, “I’ll fix the aluminum wiring, but I won’t replace the furnace,” and the buyer will probably be happy. But if you had mitigated the aluminum wiring before listing, you can’t play that card and may have to replace your furnace to keep the buyer from terminating.
Keep in mind that an old furnace and aluminum wiring are not visible to buyers the way a worn hardwood floor or rippled carpet are, and replacing the furnace or mitigating the aluminum wiring before listing will not bring you more offers, and not doing so won’t reduce the number of offers you receive.
Sellers also ask me if they should buy a transferable home warranty before listing because of their older appliances. Again, I urge sellers to save that move as an effective response to an inspection objection requesting replacement of those appliances.
If you’re wondering what you should or shouldn’t do before selling, invite us to meet with you in your home.