Why Invest In A House You’re Leaving?
A Seller’s Guide to Smart Property Decisions
It seems counterintuitive to put money into repairs and renovations of your home when planning on selling. However, there are good reasons for doing just that.
DESIRE FOR MOVE-IN-READY HOMES
In the past buyers would expect to do work in a home they were looking to purchase. They expected to paint, change light fixtures, and fix up plumbing and gardens. In today’s real estate market, this type of buyer is nearly always an investor looking to “flip” a property for a handsome profit.
Today’s home buyers are people with busy lives. They don’t have the time, desire, or expertise to spend time on home repairs. They are looking for move-in-ready properties and are willing to pay more to get such a home. Sweat equity no longer has the appeal it did years ago.
After exposure to many home improvement shows on TV, expectations have also shifted, from home sellers looking to maximize the value of their homes to home buyers who want modern homes with natural light, open floor plans, great kitchens, and higher ceilings.
FINANCING
Financing options such as home equity loans and lines of credit make it easier for homeowners to fund renovation projects before selling. This access to capital enables sellers to make improvements that enhance the marketability and value of their homes.
The financial picture looks different for the home buyer. Saving up for a down payment takes time. And, there may not be enough money left after purchasing a home, to tackle any renovations. Yet, if those renovations or repairs have already been done, the increased purchasing price can be bundled with their mortgage and paid for.
INCREASED ROI ON RENOVATIONS
The real estate market is competitive. Competition among sellers can be fierce and buyers have high expectations. In this type of market, renovations have the potential to produce a higher return on investment (ROI). A strategic improvement in a home’s functionality, energy efficiency, and aesthetic appeal can translate into significant gains for the seller.
A seller’s market with high demand and low inventory will make a property stand out after upgrades. A seller can ask for a higher price. On the other hand, a buyer’s market has abundant inventory which could make it more difficult to recoup a renovation investment.
TIMEFRAME FOR SELLING
It makes sense that your timeframe plays a major role in determining whether to renovate or invest in cosmetic improvements and curb appeal.
If you are short on time and need to sell quickly, a renovation or major repair may not be feasible. In this case, a cosmetic make-over becomes the go-to investment. This means that you will rely heavily on first impressions. (For more information about first impressions click here.)
With time available, you can consider larger-scale renovations that could significantly increase the value of your home.
FASTER SALES
Statistics prove that a renovated, repaired, and well-staged home expedites selling. A renovated and well-staged home sells 88% faster than those that are not. Such a home also sells typically for more than 6-20% above the asking price.
A home with upgraded features and modern amenities is more desirable to potential buyers. A well-staged home stands out from the competition and spends less time on the market. It will also attract serious offers quickly!
It is important to consult with a realtor or contractor who knows the local real estate market and can recommend improvements that will give you the best results. They can help you decide which renovations are worth it based on trends, buyer preferences, and the characteristics of your home.
Whatever you decide, do it strategically and under the right circumstances by weighing the costs and benefits of improvements, considering market conditions, and seeking expert help.
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BLUE SKIES!
