Making repairs prior to the sale
New. Just replaced. Upgraded.
Such sweet music to any buyer’s ears.
Before your real estate agent puts the “For Sale” on your lawn, it’s likely that you’ll need to make some repairs and improvements. But what kinds of repairs should you make? Do you repair larger items? Do you totally upgrade the basement? Do you hope nobody will notice?
A home in move-in condition appeals to more prospective buyers. It’s a given rule in real estate that a house in good condition sells more quickly than one that requires upgrading. If your home is well maintained, and shows well, many buyers could possibly make you an offer. With multiple offers, the price is likely to rise. This is not unusual in a hot market.
A home requiring a lot of work is less appealing to some buyers. Some people don’t have the time, money, or the inclination to complete the repairs. First-time buyers and those with a busy lifestyle generally want a maintenance-free home.
When considering repairs on your home, consider the market and your neighborhood. In a hot market, perhaps you won’t need to do anything. Perhaps, in a buyer’s market your repairs and upgrades should be completed so you get the best possible price.
Home inspections are popular
Many buyers will request a home inspection. This could work for or against
a seller. Depending upon how it’s written into the contract, a buyer
could terminate the contract upon unsatisfactory findings, or if specified
repairs are not completed. He or she could also re-open negotiations.
An unhappy buyer could also request a substantial discount for the cost
of the repairs. The seller pays for it now, or later.
Don’t get carried away
Dollar-for-dollar, not all home improvements raise the value of your home.
It depends on the cost and type of improvement. You could spend $30,000
on a backyard paradise, complete with mature trees, waterfalls, rock gardens
and sprinkler system. Will this mean your property is instantly worth
an additional $30,000? Unlikely.
Many buyers like the idea of a garden and backyard. But a simple, attractive
yard with a nice fence, swing set and flowerbeds is adequate. Most people
are unwilling to place a $30,000 premium on a garden. If you spent $25,000
on Italian marble for your bathroom you’d likely have the same result.
While you’re willing to pay the price, it may not significantly
increase the value of your home by the same $25,000.
When you’re considering renovations to your home, consider the cost
and the neighborhood. Select renovations that won’t stretch your
budget. Be mindful not to over improve your home in regard to the neighborhood.
When it comes to buying a home, buyers seek the least expensive home in
the most expensive neighborhood they can afford. If your home has too
many improvements, it may be priced at the high end of the local market.
From a selling position, you may not get the best price. It may also take
longer to sell your home. And, the longer your home stays on the market;
you’re more inclined to reduce the price to ensure a sale.
Perhaps you’re planning to move in a few years and hoping to recover
the costs. Canada Mortgage and Housing Corporation suggests the following
as a payback range of typical renovations:
|
68-74% |
|
64-71% |
|
62-66% |
|
62% |
|
49-56% |
|
50-52% |
|
48-50% |
|
45-49% |
|
40-42% |
|
38-43% |
|
33-39% |
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