Are you doing maintenance or updates to sell your property?
When you purchased your last home, did you buy a home that was freshly painted or did you have to strip wallpaper and completely repaint the house? Did the home have brand new flooring or did you have to refinish floors or buy new carpet? Did it have new stainless steel appliances or did you have to buy all new appliances? Did you have to replace the windows, roof, HVAC or water heater?
These updates and repairs that repeatedly come up with both buyers and sellers are causing discrepancies in the perceived value for the houses on the market. We frequently see the following:
- You purchase your home as brand new or in completely updated condition for a higher price.
- You have to make all of the improvements after you purchase a home but expect to get a fantastic deal on the house. You are willing to put in the sweat equity!
It is funny how our perspective changes as we become the home owners. As 10, 15 or 25 years go by the house we purchase becomes our home. We personalize it to our taste. We get comfortable with the issues in our house and we don’t see them as major drawbacks. These are just the little quirks that we deal with in our home. We tend to think, if it isn’t broken, don’t fix it. We don’t want to come out of pocket for expenses that are not really necessary. We spend our money on other important things in life instead of updating our home. Remember, you live in your house and you have wear and tear that happens as part of having kids, pets, guests and maybe even a couple of oops that you yourself have done.
Now back to my first question, are you doing maintenance or updates? The reason why I ask this question is because I think we need to have a paradigm shift. After we have lived in our home and we paint, update appliances, etc…we tend to consider it updated. The home is now updated from how it was when we purchased it. But now you are ready to sell your house and you are under the impression that since it still works just fine, the new buyer should be just fine with it, RIGHT? WRONG!!
Many of the improvements that you consider to be upgrades are really only maintenance items to the buyer. Some of these include: fresh paint (walls, ceilings, doors & trim), new flooring, new appliances, updated kitchen countertops, windows, roof & HVAC. If your home is more than 20 years old or you have lived in your home for more than 20 years and cabinetry has not been updated, much of it is now considered functionally obsolete. The feedback you will get from potential buyers is that the kitchen is considerably more outdated than they are willing to take on.
Many of the maintenance improvements that you make to sell your home may be used to lower your tax liability on the profit on the sale of the house. Make sure you consult a tax accountant so that you know what can and cannot be deducted.
What are the Buyers Concerns?
Buyers are now very cost conscious about what their monthly payment is going to be. Many first time home owners are very concerned about the hidden costs of purchasing a home. They do not have or want to put out extra money to make upgrades. If buyers bought a home in the past and did all the upgrades for kitchens, bathrooms, and new flooring, they may not want to do it again.
It is a better value for the buyer to pay a little more and have everything completely updated. The cost of improvements is included in the mortgage payment for an older home. Buyers typically do not know what the cost of an improvement will be and if the cost of the update is $1,000 their perception is that it will cost as much as $4 to $5K. This lack of knowledge equates to a lower bottom line for the seller which can be equally painful.
Buyers can also choose to buy a brand new home so they do not need to worry about updates and maintenance issues for the first 10 to 15 years. Buyers want to be able to come in and buy a turnkey (fresh canvas) home that they can just move into, start living and making their own personal enhancements.
So what is the solution? It depends on the price point of the house, the location and how much of a buyer or seller market it is at the time you are looking to sell your house. This probably was not the cut and dried answer you were looking for. If you are considering selling your house any time in the next 1 to 5 years, it is a really good idea to sit down and have a consultation with a Real Estate professional that can give you a suggested list of improvements that you should do to get your house ready to put on the market. If you start early, you get to enjoy those improvements for yourself instead of fixing your home up only to sell it. You can also spread the cost of improvements over a longer period of time. This way you won’t feel like it just cost you a lot of money to improve and then sell one of your most valuable investments.