You’ve decided that it’s time to sell and you realize that there’s some work to be done to your home before placing it on the market. You begin to question whether there are any upgrades that should be added, and if so then what? If you have the money to invest into your home, upgrades can definitely boost appeal to potential buyers. However, at the same time, owners looking at expensive renovations should be careful, because there is the possibility of pricing yourself out of your own neighborhood.
There seems to be a common misconception among sellers, who believe they will get their return of investment after spending thousands and thousands towards their remodel. You potentially could, but unfortunately it doesn’t always work out that way. In fact sometimes the most basic repairs and tweaks can be the difference maker without having to invest large sums of money.
Your Neighborhood & The Current Market
You need to consider the market value of your home within your neighborhood. If recently sold properties show certain upgrades that your home does not have, whether it’s a remodeled kitchen/bathrooms or newly landscaped yard. Those would be prominent upgrades to consider for your own home, which would be beneficial to obtaining equal value to those that were recently sold. However, If those same comparable properties don’t show any significant upgrades, this is where you need to be careful and think “less is more”.
If comparable properties recently sold within your neighborhood show a value of let’s say $500,000, and neither those including your own home show any significant differences in terms of upgrades or renovations. Then it’s probably not wise to spend an extra $50,000 in upgrades on your own home, for the sole purpose to sell. You can’t automatically assume that your property is now worth $550,000 and will sell as such, especially if the neighborhood value doesn’t represent that number. There’s a high chance the property will just sit idle on the market, and the seller might not see a return of investment, especially when there’s a significant price differential.
It’s also important to consider the current market structure. Is your current market favoring sellers or buyers? If it’s a buyers market with an abundance of properties to choose from, it’s not uncommon for the highest priced properties within their neighborhood to sit idle on the market, until there’s price reductions. Understanding the current market will help you prepare your home.
Style Is Subjective
Now I’m not saying that just because a comparable property has upgrades to their home that you need to do the same as well. Or likewise if those same comparables don’t have any upgrades that you shouldn’t consider it for your home either. Do it for the right reasons! I don’t think any homeowner should overlook the impact of a remodeled kitchen or bathrooms which are two of the most common and impactful upgrades for a house. They could definitely have an impact on the value of your home when it’s on the market. What I’m trying to ultimately say is that you need to be mindful of the possibility that you might not get as much in return as you had originally thought. Not only that, but it’s important to keep in mind that taste and style towards upgrades is ultimately subjective.
What you may think looks nice, may not be seen the same to potential buyers. What you added as an “upgrade” , others might see it as a negative that needs to be upgraded. You add in new wood floors, well maybe buyers prefer carpet or tile. Maybe you choose a style of granite counters that suits your own style that YOU like, but may not be universally loved and could be frowned upon. I’ve seen it happen far too often, especially in kitchens. An example that I’ve seen and was told was an “upgrade”, is what I can only describe what looked to be “zebra style” granite counter tops in the kitchen. We were told that the owners chose what they liked even though the purpose for remodeling their kitchen was to improve the value before they sell it. Unfortunately, many of us who walked in the home cringed when they saw it. That’s why the styles and colors of improvements should be as neutral as possible, especially if the main purpose of those upgrades is to sell the house in the near future.
Sometimes “Less is More”
I’m a firm believer that you don’t necessarily need to make large upgrades, especially if you can’t afford them. In fact sometimes the most basic of tweaks can also be impactful. For example, a fresh coat of paint throughout the house, or replacing any fogged up windows, damaged doors and fixtures. Take an extra step and get a home and pest inspection prior to selling. Value to a home does not solely rely on expensive upgrades. Find out everything that may need repairing and have them fixed and or replaced. Having remedied any problems that came up during the home inspection and having a section 1 termite clearance, can have a positive impact with the sale, and will not go overlooked to potential buyers.
When it comes to the selling process, buyers contractually have the right to property investigations during a period of time in escrow. This is buyer protection, to ensure what they are buying is up to par in terms of quality. Any problems that show up could impact the sale or prompt a renegotiation of the original agreed upon price. This is why it’s beneficial for sellers to complete these inspections ahead of time. Sellers who are proactive and get these completed and remedied, put themselves in a more favorable position during negotiations.
Can upgrades be valuable? Yes! Can upgrades and renovations increase a home’s value? Yes! Can you also potentially price yourself out of your own neighborhood and make it difficult to sell? Yes as well! This is the basic Info that I’m trying to convey in writing this. There are many different factors in place that can impact a sale. If you’re looking at upgrades for the sole purpose to sell and increase the property’s value, then do yourself a favor and compare your property to other properties that were recently sold in your neighborhood, before you perform any work. You might find that some of those upgrades are not warranted and should sell as is, or you might find that some work may be necessary. Whatever you decide, do it for the right reason.