Slight Improvements Are OK, But Don’t Go Too Far
If you’re preparing to place your home on the market, it’s inevitable that you’ll need a couple of minor repairs and slight improvements before your broker can drive a “For Sale” sign into your front yard.
Practical and aesthetic projects like a fresh coat of paint drain neither time nor money and can make your home more attractive while perhaps speeding your sale.
But what if a larger item needs repair, something which doesn’t jeopardize anyone’s health or safety. Should you simply disclose it and leave the buyer to deal with the problem? Or should you fix it before placing your home on the market?
Before you make any decisions, consider that repairing the problem yourself could result in a potentially higher sales price for you. If your house is in move-in condition, it will appeal to a wider group of prospective home buyers. First-time home buyers, and buyers with busy lifestyles, often will not consider buying a home that needs a lot of work. That is because they do not have the time or the experience to deal with the problems.
The listings that command the most attention are those that are in the best condition. If homes look sharp and are priced right, more than one buyer may make an offer. When multiple offers occur, the price may get bid up. Even if there are not multiple offers, experience has shown that a house that is in good condition will sell more quickly than one that needs work. A quick sale often means that the sales price will be close to the list price.
The Home Inspection
Another point to consider: Many if not most home sales today include the use of a home inspection clause. Depending on how it’s written, this clause can allow buyers to terminate a contract if the inspection is not “satisfactory” to them or if certain repairs are not completed.
Buyers often have the opportunity with a proper inspection clause to effectively re-open negotiations by either asking the owner to undertake repairs. Another result of an unhappy inspection works like this: The buyer asks for a discount—sometimes a very ambitious discount based on an inflated view of repair costs.
What Does The Market Want?
When considering minor aesthetic improvements, your decision should depend on local market conditions. Your agent can suggest what’s needed to be competitive and perhaps what’s not. In a hot market you may need to do nothing, while in a buyer’s market your list of repairs and upgrades may be extensive.
Don’t Do Too Much!
While not fixing up is a problem, fixing up too much—over-improving—is also an issue. The usual rule for buyers is that they purchase the least expensive home in the most expensive neighborhood they can afford. The result is that a house with too many improvements may be priced at the top of the local market, not the best place to be from a selling standpoint.
The moral of the story: You have an obligation to repair or at least inform buyers regarding health and safety hazards. For their protection—and to guard against unwarranted future claims against you—buyers should get a home inspection.
No less important, the longer a home languishes in the marketplace, the more likely it is to fetch a lower price. Thus fixing up is not only good for buyers, it also may lead to a quicker sale—something beneficial for owners.