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Friday, June 22, 2012 - Should I update my home before selling?

Q: I’m thinking of selling my home, and know my carpet and tile need updating. Is it best to do it now or give an allowance on the selling price for these upgrades? The same with appliances?

A: The age-old, existential question faced by buyers and sellers since time eternal: update or credit? There are dozens of ways to weigh the pros and cons of this dilemma. Some would have you do some complicated mathematical analyses to calculate whether the return on the investment it would cost you to update these items is worth it, compared to the assumed incremental marketing power of offering your home at a lower price.

For one, addressing these sorts of questions mathematically is impossible to do without taking on a boatload of error-prone assumptions. That’s because what does and doesn’t work with buyers is not necessarily logical or calculable, nor are some of the other factors you should account for as you make this decision. My vote is that you should at least consider replacing them now, but only after you get input from an expert local real estate agent or stager on your color, material and aesthetic choices.

Here are the three primary factors underlying my recommendation:

1. If you’re not yet 100 percent sure you’re selling, replacing them now allows you to enjoy the upgrades. So many sellers, and I include my younger self, tend to make the upgrades and updates they’ve long dreamed of only when they’re planning to move, missing out on the ability to enjoy the home in its best shape. And that’s a shame. For that matter, it is not at all uncommon for home sellers to see their spruced-and-staged property and wonder why they decided to move in the first place!

In the interest of maximizing the enjoyment you get out of your home and your life now, you should at least consider updating these items if you can afford to, and enjoying them as long as you can before you do decide to sell the place, taking extra special care to live lightly on them in the interim.

2. Replacing them now might boost your home’s chance of selling more than a price discount. I do not exaggerate when I say that in many areas, today’s market is better for sellers than it has been for years. That said, there are still loads of short sales and foreclosures on the market that are priced aggressively low, many of which also need updating, and those are your competition. You might not be able to price your home enough lower than these homes to make the discount for updating obvious to homebuyers who see your home and also visit the competition.

Additionally, when a home is in need of the updates you mention, it may — simply put — show poorly. And buyers simply like homes that look move-in-ready. Some won’t even consider fixers, and I’ve even seen some die-hard amateur handypersons be tempted with the allure of a polished, freshly updated home (and the work-free weekends it promises).

If a few thousand dollars in basic updates and appliances makes the difference between your home showing like a fixer-upper and showing like a showplace, doing the updates before you list the place can be the difference between it selling or not — period.

3. Replacing them yourself might be more cost-effective. Buyers almost always overestimate what things like carpet, paint and appliances will cost, so they might scoff at whatever you offer as too little, and request a bigger credit or discount than you had planned On the other hand, if you have the items replaced yourself, you can be as aggressive as you want to be in terms of shopping around, getting deals, doing the painting yourself, hitting up the appliance outlets or calling in favors with any vendors or contractors you or your agent might know.

If the work is done well and the outcome is beautiful, depending on your local market dynamics, putting a well-prepared, updated home on the market may even position you to get more than one offer (and a better price, to boot).

There’s no one right answer to this question for every homeowner. Some may not have the money, or may be in a hot enough market that buyers bite on every listing. But my experience has led me to generally prefer putting a polished property on the market over a discounted cosmetic fixer every time.

Written by Tara-Nicholle Nelson, author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions."  as published by Inman Real Estate News.

posted in General at Fri, 22 Jun 2012 14:30:22 +0000

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