Of course agents are quick to recommend it, but should you update your home before you sell? Conventional wisdom says updating results in a higher sale price and faster sale. That’s not always the case; real estate is not a one size fits all business and a dollar in is rarely a dollar out. Avoid unnecessary work that costings money, time and emotional duress. Before opening the checkbook, understand the competition, the current market and the most likely buyer. Some things are worth doing and should be done, many others are not. Light cosmetics, fresh plantings and the routine things? Sure. New granite, appliances, fixtures, major painting and roof….slow down. It’s always a math problem; will the costs be recovered when the home sells?
Who Says You Should Update Before Listing?
Every home will sell; the only question is what the market (current buyers) will pay. The single most important variable is current micro market condition. Where is the home, what’s the price point and how’s the market? In a highly desirable market, homes often sell regardless of that worn shag carpet or those groovy paisley Formica counters. In a balanced market, certain areas of the home may need to shine and in a buyer’s market, more significant work may be required to stand out from the rest. Sandy Springs isn’t Roswell isn’t Woodstock isn’t Duluth isn’t Marietta….updates to consider are market (buyer) driven and best determined by a professional agent.
Who is Buying the Home?
What’s the target buyer? FHA and VA loans have stringent requirements for property condition; the home must be inhabitable and in “good repair”. In other words, livable as is. The most common issues tend to be things like damaged carpet, peeling paint, inoperable appliances and roof issues. When the home is appraised, defects and problems specific to these loans are required to be noted on the appraisal report and they must be corrected. Conventional guidelines are much more liberal but obvious deferred maintenance and any major issues will be noted. With cash buyers – and many “iBuyers”, there is little to no oversight beyond whatever due diligence period they have.
Cost vs Return
Not every home requires significant updating before listing; fresh pine straw, pressure wash, decluttering and colorful flowers might be just fine. Money can be saved working with a professional agent to analyze the market and determine what, if anything, is genuinely required
It cannot be stressed often enough, a dollar in does not equal a dollar or dollar+ out. In fact the vast majority of improvements do not return the initial cost upon resale. Do not rely on HGTV, “studies” completed by building trade groups or those prepared by realtor associations; they all have obvious vested interests. It is critical to carefully study the economic feasibility and likely return on investment for any improvements contemplated. Will the work completed positively impact the appraisal? Trends and patterns will develop and that is the best indicator of what to expect.
The Keys to Success
Every home sells at some point. The best outcomes have three key factors aligned when compared with the competition; price – exposure – appeal. The home must be accurately priced, must be easy for both agents and the public to find and it must be appealing. Identify the most likely buyer, identify the trends in the micro market and prepare the home to compete effectively. There are countless examples of sellers spending significant money on granite, tile, carpets, fixtures and the like only to hear “the buyer didn’t like the counters, carpet or fixtures” during feedback. So:
1 – Work only with professional agents (GOOGLE every agent)
2 – Identify the most likely buyer (know and target your audience)
3 – Review trends over the last year and anticipate the next several months (dig deep into that data)
4 – Identify any areas requiring special attention (major deferred maintenance, VA/FHA issues)
5 – Price it competitively (in line with closed sales, what is an appraiser going to see?)
6 – Negotiate realistically (it’s business, don’t take anything personally)
Real estate isn’t rocket science; but 10% of the agents do 90% of the business for a reason. Experienced agents understand the nuances and trends, know how to position homes to successfully sell and understand how to manage things to the closing table. Spend money on what is required to ensure the best results; it might require a lot, a little or perhaps nothing. Every home and every market is different. While we can’t know where the 2019 market ends up, we do know the “Buckle Your Chin Strap” sign is flashing.