Sellers – Renovate or Sell AS-IS?

Should you renovate to sell your home?

We often get asked by our Sellers, is it worth making a ton of home improvements – other than the typical staging suggestions we’ve made in previous blogs – or should you sell “as-is”?

Of course, it depends on what the Seller can afford to do, how much the Seller wants to make on the home, the particular improvements the home needs, the local market trends, and the condition of the homes that are the closest competition.

renovate

How a Buyer will look at your home

As we’ve worked with Sellers over the years, we’ve come to realize the mindset of the Seller, compared to the mindset of a Buyer, is very different.

For instance, if the carpet in a Seller’s living room is original to a 20-year-old home, there is likely no life left in it, something most people can agree on. If the Seller were to replace it with something mid-grade, they could foreseeably spend, for example, about $1,000 – $1500.

When the Buyers see the same need for new carpet, they tend to calculate about $3,000 for the carpet, and they will likely subtract that from the price they’re willing to pay for the home.

It’s hard to define why there is such a difference between what the Seller sees vs. the Buyer, but it happens more often than not.

Now add to that old appliances, out of date fixtures, an older roof, HVAC and siding. These things may not all be worth the Seller’s attention, but all together, they will add up in the mind of the Buyer.

If a Seller isn’t able to repair and renovate, or isn’t willing, then they need to be prepared for lowball, or perhaps, no offers, depending on their list price. They cannot expect to get market value if their home doesn’t show well, and they also might want to consider offering the house “as-is.”

Unless the Buyer sees the words “as-is”, they can get overwhelmed with the number of updates needed, and, if they’re at all interested in doing the work, they’ll certainly want the home for a bargain.

Most Buyers want a “move-In” ready home

If at all possible, making the improvements before putting the house on the market will be to the Seller’s advantage. The majority of Buyers want a home that is “move-in” ready.

By addressing the condition of a home, Sellers can appeal to the majority of Buyers, rather than that small subset of Buyers looking for a fixer-upper.

The bottom line is: if you want top dollar, your house should be in the best condition possible.

A Buyer should be able to move right in without having to do a single repair. That means the major systems should be in working order, the home should be clean with a coat of fresh paint. The carpet should be in great condition and the floors in good repair. Lighting and fixtures should be updated and colors should be neutral. Anything that is dated needs to be eliminated.

What If It Can’t Be Done?

Some Sellers, however, are in a situation where they are unable to make many updates and renovations. In that case, they should do as much as they can to make the home as updated as possible, and then they should price the home accordingly.

If similar homes have better amenities, their home will have to be priced below the average price that those homes have sold for.

It’s About Expectations

If a Seller understands that they won’t get top dollar and price their home accordingly, then they should have success.

As we’ve discussed in a previous blog about correctly pricing a home, if a Seller tries to get a higher price – to “test the market” – then they can count on being on the market longer and on lowball offers.

Even as a Seller drops their price, the length of time on the market will add up and they’ll face having a “stigmatized house.” Buyers will naturally wonder, “What’s wrong with that house that it has been on the market so long?”

Where to Start

Let’s look at some items that could be considered major, like the roof, the HVAC, or refinished hardwoods.

Some items are worth going spending a little extra on, some are not. With some updates, you may want to spring for the best available, depending on the comparative homes in your market. For example, architectural shingles are not that much more than the basic type of shingles, but look so much better.

On some items, like carpet, you may as well go with a mid-grade because top-of-the line flooring won’t give you a better return on investment.

Small Changes Make a Difference

Don’t forget the small items. Changing out light fixtures can make a big difference for little cost. Faucets and knobs are also a low-cost fix that can bring a home into the 21st century.

Painting is always a good investment and one of the least expensive updates a homeowner can do. Along with cleaning and de-cluttering, doing small repairs and updates will be worth it.

Keeping up with home improvements is the best way to maintain and improve a home’s value. When homeowners defer the maintenance, when they decide to sell their home, they often find that the list of repairs and updates is overwhelming.

Here are a few other small things that you can all do that will add up to meaningful improvements in your home:

Energy Saving Improvements

1. Seal off drafts, which can reduce your energy bills 5 to 30 percent, according to the U.S. Department of Energy. The cost is a tube of caulk. Just doing that can drop your annual heating bill by $100, according to Department of Energy figures. Be sure to publish your low energy bills.

2. Buy a programmable thermostat, for about $100. By maintaining more constant heating and cooling levels, and always “remembering” to turn down the heat at night, the average family will save $150 a year, according to the EPA.

3. Install dimmer switches. Increase the life of your bulbs, and reduce the amount of light when you don’t need it.

Small improvements on the exterior of the home can make a big impact on curb appeal.

1. Clean and clear a path to the front door. Power washing and cutting back the overgrown plants will do wonders for the appearance of the home.

2. A fresh coat of paint will go a long way. Painting the door and the shutters, staining wood and cleaning or replacing the hardware will make the entrance sparkle. House numbers can add a great sense of style, and a newer mailbox can also make a statement.

3. Lighting makes a big difference, for safely walking around the property, whether it’s up-to-date, and whether it fits the style of the home.

4. Plants and flowers make the home welcoming and can add color, life and softness to the architecture.

 

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Charles McDonald
Charles McDonald
PRINCIPAL BROKER®
Charlottesville Solutions
2013 Woodbrook Court, Charlottesville VA 22901
434-515-1585
REALTOR® - Licensed to sell Real Estate in Virginia
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