What to Consider When Updating Before Selling
What to Consider When Updating Before Selling
Selling your home for the first (or second) time can come with questions. Nine out of ten times when I talk to someone who is thinking about selling their home their questions are related to updates. I’ve had sellers ask me:
“Should I finish the 3rd floor before we sell?”
“Should we replace the countertops?”
“Do I need to paint?”
Sometimes the answer is “yes!” Let’s be honest, most homes will need some sort of updating to get top dollar on the market. I find the changes sellers are planning to make sometimes are not the most impactful for selling the home, though. There are a few factors to consider when you’re planning where to put your money before listing.
Who’s Buying Your Home
This is a simple question that can sometimes become very complicated. I’m not asking you to describe the person buying your home down to the brand of tennis shoes they wear. There are many Fair Housing guidelines when it comes to marketing your home in terms of the specifications (age, race, etc.) you can/cannot use to filter potential buyers, but it is important to consider what category the buyer of your home will fall into. Categories include: First Time Buyers (FTBs), Move-Up Buyers, Renovators, Investors, and so on. Someone who is an FTB might have a different budget for making updates versus a Renovator. Making this sort of determination can help you decide what needs to be updated - mechanics, cosmetics, or nothing at all.
Can Your Neighborhood Support the Update Costs
It might seem like I’m saying you should start a pool for your neighbors to give you money for your updates but that’s not quite it. What I mean by “support the update cost” is if the surrounding houses that have recently sold are going to be close to what you want to list the house for after you complete the work. Simply, will recouping the invested money mean pricing your home out of your neighborhood.
Example:
Neighborhood home price per square foot: $125 Your Square Footage: 2,400 square feet Sales Price Pre-Investment: $300,000Invested Cost: $30,000Additional cost per square foot after investment: $12.50 (or $137.50/sq ft) Sales Price Post-Investment: $330,000Before you make those kind monetary investments have a Realtor run some comparison sales for your neighborhood to see if other homes in the neighborhood and surrounding area have sold for a similar price per square foot and/or sales price.
Tip: Sales price and price per square foot are not mutually exclusive items. Just because a house sold for $330,000 in your neighborhood doesn’t mean your house can sell for that. Seek the guidance of a Realtor before assuming you can make the money back in your sales price.
Is the Emotional Cost Worth the Monetary Return
This is a question I think should be asked more about a lot of things in life, not just renovations, but for now we’ll keep it to renos. Updating your home is not just a monetary investment but an emotional one with the time you’ll spend making the updates yourself or coordinating the work and then the emotional investment you’ll have in selling the home on the backend. Will the money, time, and stress you’ll have to spend to make the updates be worth the money you’ll make on the sale.
Tip: This is a great place to ask a Realtor for help. They can often help you find people to do the updates, if that’s the route you choose to go, or they can help determine what the financial return will be once the updates are complete.
What’s Happening in the Area - Not Just Your Neighborhood
Before diving into the task of updating take a quick whirl around your county websites (or Google) and see what might be in the works for your general area. Things like new construction homes, widening roads, or newly developed shopping centers can affect the sales price of your home. If making updates will cause you to list your home at top dollar but someone can buy a new construction home about the same size for about the same price a mile or two down the road that may significantly sway a buyer and your house may sit on the market longer. Better to know that before financing the updates on the front end and then the emotional cost on the backend while you wait for someone to buy your house. Sometimes it’s better to list the house at an appropriate price without the updates and sell quickly to give yourself peace of mind.
Tip: Sometimes Realtors have the inside scoop on developments that will be coming. They may know builders. They also may be able to tell you how those developments have been affecting sales of surrounding neighborhoods.
What is Your Goal
Consider what your ultimate goal is. Is it making the most you can on your home? Is it selling it quickly because you have another house you’re trying to buy? Is it capturing the most buyers’ attention? Each of these goals will determine a different strategy for your listing. It may mean putting in the work for updates yourself. It may mean pricing it below the average listing price of the area to get people in the door. It may mean painting and staging to make the biggest impact for the lowest investment. Determine your goal then build a plan from there.As you think about listing your home don’t jump straight to new kitchen counters and bathroom vanities. There may be other, more appropriate updates, to be made instead. Maybe a new roof is a better investment than granite counters. I always suggest talking to a Realtor before you make any updates. A Realtor can help you weigh the items that will come up during an inspection and potentially cost you money after you’ve already spent your allotted budget on the kitchen. No one wants to come up negative in their sale; having a pre-listing conversation can help you avoid that. Ready to start talking about listing your home in Richmond, Virginia? Let’s chat!