Every year about this time, people start asking us, “What should I do to get my house ready for sale.”
In fact, we often find ourselves visiting a number of homes for a quick walk-through to help homeowners identify what needs attention and what doesn’t. In some cases, people are looking to hit the market this spring. Other times, the need isn’t quite as urgent, and they’re pulling together a home improvement game plan, with the idea of selling sometime down the road. Either way, there are certain things you can do to a house that are cost-efficient, and other things that will just be a colossal waste of money.
A good place to get some reliable data on the payback for various home improvement projects is the Remodeling Magazine cost-versus-value report. On an annual basis, it analyzes the cost for a wide variety of home improvement projects and estimate what percent of the cost will be recovered when the home is sold.
To the surprise of many homeowners, there is only one improvement that will entirely recover the cost when the home is sold, and that’s replacing the front door. According to Remodeling Magazine, a new front door averages $1,230, and at the time of sale homeowners can expect to recoup 101.8 percent of that cost.
The next five projects with the highest return on your investment include, garage door replacement ($1,595, 88.4 percent), siding replacement (vinyl, $12,013, 80.7 percent), deck addition (wood, $10,048, 80.5 percent), minor kitchen remodel ($19,226, 79.3 percent) and new windows ($11,341, 78.8 percent).
Conversely, the least-profitable investments include a sunroom addition ($75,726, 48.5 percent), home office remodel ($29,066, 48.7 percent), bathroom addition ($39,578, 57.8 percent), backup generator ($12,135, 59.9 percent) and master suite addition ($11,245, 61.7 percent).
It’s important to note that these are national averages. As a result, the cost and payback can vary substantially, depending on your location and the exact type of work being done. As anyone who has ever remodeled a house knows, it’s possible to spend anywhere from $10,000 to $100,000 or more fixing up something like a kitchen. Nevertheless, the general lesson to be learned from all these facts and figures is this: Other than cleaning, painting and some new carpet, there isn’t much of anything you can do to a house (short term) that will yield a positive return on your investment at the time of sale.
So, does that mean you shouldn’t do anything in preparation for a sale? The short answer is no. Like we said, a general freshening with paint, carpet and cleaning, and perhaps some minor landscaping, is always a good idea to prepare for the buyer’s eye. Plus, make sure everything is in working order, and if it isn’t, fix it. But beyond that, it usually isn’t worth your while to make more extensive changes. However, there can be some exceptions.
If certain parts of your house have become functionally obsolete, it might be advisable to explore bringing those items up-to-date before going on the market. Some examples would include installing central air conditioning, converting a half bath to a full bath in homes that currently only have one full bath and, if possible, reconfiguring a two-bedroom house so that it has at least three bedrooms. You see, there are certain minimum standards buyers expect out of a house, and properties that don’t meet those standards often languish on the market because the vast majority of buyers just don’t have the vision to understand how a functionally obsolete house can be brought into the 21st century. Moreover, buyers will frequently inflate the cost of making changes to a functionally obsolete house as rationale for lowballing sellers on price. Consequently, it may be in the best interest of the seller to get some of these things done prior to going on the market, so long as the cost isn’t excessive.
Unfortunately, the decision about what improvements to make isn’t always cut and dry. Many times, it’s a judgment call. One that comes up a lot are kitchen counters. A lot of homes out there have tired old Formica or Corian counters tops, and buyers tend to be really put off if they don’t see some granite or Silestone. The good news is that granite has become so commonplace that the cost has really come down. So, there can be situations where you might want to ditch the avocado Formica in favor of a more contemporary surface. But, we have one work of caution. Don’t get too creative with the color/style of granite or Silestone you select. Just like it’s always best to paint walls a nice neutral color, also be conservative with your counters.
If your home is in need of a lot of updates, another option is to have your real estate agent consider marketing the property through the use of what’s called a 203K loan. With this type of loan, buyers can fold into their financing a wide variety of home improvements, everything from new appliances to a complete remodeling job. Agents who understand these financing options can effectively help buyers overcome the concern about updates or repairs, and reduce or eliminate the need for sellers to address these issues.
So, when you’re thinking about selling, and contemplating what to do around the old homestead in preparation for a sale, don’t haul off and start knocking down walls or heat up the Home Depot credit card. First consult with someone who knows what’s worth doing and what’s not. That way, you’ll get the biggest bang for your buck when it comes to attracting buyers.
Bob and Donna McWilliams are practicing real estate agents in Maryland with more than 25 years of combined experience. Their email address is McWilliams@BobDonna.com.