Wednesday, November 6, 2013

Should I Fix Up My Home Before Selling It?

Should I Fix Up My Home Before Selling It?

Here's an old-age question and one that my new clients often ask. And the answer is, it depends. The best approach is always to ask me first for the insider knowledge and experience about the particular condition of your property - so I may assess it for what you need to do, and what you don't need to do to maximize the sales price, create buyer interest, and a sale.

I can help you prevent making a serious mistake when it comes to selling.

So if your house you want to list needs a new roof, deck, HVAC unit, septic system, pool, and other structural defects, that are costly to fix, you'll need to take care of it 'before' you list it for sale if you can, because 1. you'll have to disclose them and 2. these items will come up at home inspection time, and you may get countered to fix them before close of escrow, or reduce your price considerably.

If you cannot take care of those items before you sell your house, then it will need to be priced accordingly.

It is easier to sell a house that is attractive to potential buyers, which means that you spend a little bit of time and money on cosmetics. And to have to make sure the house is clean, the yard is neat, the driveway is swept, bushes pruned, loose shingles or tiles fixed, front door clean and fresh, exterior paint even and so on. This is called the 'marketability' of the house.

Every house has defects, some obvious, some hidden. Both affect the price the buyer is willing to pay. Never assume that the defects that cannot be seen won't be found by a home inspector. In fact, a home inspection, for the seller, is the hard way discovery when the buyer uses the home inspector's report to drive down the price. Buyer inspections are designed in such a way to provide bargaining ammunition for the buyer by exposing everything that is wrong or might go wrong - sometimes every little thing.

So, here's where the rubber meets the pavement. Facing up to the issues. Do you fix prior to listing for sale, or price the house accordingly? Here's the deal, potential buyers will almost always over-estimate the cost. So the question is something like this - if I fix this or that for lets say $15,000, it is worth $20,000 on the market? I ma not kidding when I say I took properties worth $180,000 on the market, added $20,000 worth of repairs and remodeling, and re-priced it $50,000 more. Same for a $800,000 property, you can add $50,000 worth of repairs for an additional $100,000 on the sales price.

And then you have to take into account that if you 'don't' fix before listing it, you eliminate a lot of buyers that just don't have the cash to do a fix up 'after' the sale since their cash went to down payment. 

But sometimes, some repairs, or remodeling, just does not add up. Why I mentioned that it depends. We call this: repairs beyond the marketable value of the house.

Richard Bazinet - Realty ONE Group - Phoenix Scottsdale Real Estate

Should I Fix Up My Home Before Selling It?