It Doesn’t Always Make Sense to Renovate Before You Sell, and This is Why
Everybody loves those house-flipping shows where ambitious renovations are presented and then revealed. Why do we love them so much? Because we all want to see and make things better. It’s a basic human instinct. And, as it turns out, when it comes to selling your own home, it’s a good instinct to follow.
Of course, it’s one thing to watch these shows and see others max out their budgets pulling off the ultimate home renovation. However, it’s a totally different story when your bank account is on the line. Pulling out all of the stops might not be the best idea when it comes to how you make your own renovation decisions. But, there are some things that you should keep in mind when deciding whether or not to renovate before you sell. You must consider the real estate market at the time of sale, your neighborhood and what buyers are looking for, because depending on all of those factors, you may need to do less (or perhaps more) than you might think.
So, before you start pounding into the drywall, here are a few things that you should take into consideration:
Is it a Seller’s Market or Buyer’s Market?
You need to know whether your local market favors buyers or sellers. To get a better understanding of this, look at trends on sites like Zillow, talk to real estate agents or check out nearby neighborhoods. Understanding what the market is doing will help you determine how much you need to upgrade your home.
If you find that a lot of those nicer for-sale homes in your area haven’t sold, then the market likely favors buyers. This means that because home buyers have more homes to choose from, they’re going to choose the ones with the nicest updates, lowest prices and better neighborhoods first, leaving many homes to sit idly on the market.
On the other hand, if you notice that homes are getting snatched up faster than you can find them in the paper, then it’s a seller’s market. In this case, there won’t be as many homes to choose from, so sellers are able to get above asking price through bidding wars.
Improve According to Market
If you are selling in a buyer’s market, it’s more likely that you’ll need to do more to your home to stand out in order to appeal to buyers. But, if you’re facing a seller’s market, you can actually get away with fewer upgrades, as homeowners will compete to buy your home regardless of how updated it may be. So, spend your money wisely before you blow your budget.
Consider Your Neighborhood
Another thing that you have to consider before throwing out money for renovations is the area in which you live, as you don’t want to price yourself out of it. For instance, if your home resides in an older neighborhood, you don’t want to renovate your home to the point that it looks out of place. You have to find a nice balance. If most homes in your neighborhood have dated finishes, turn your focus to a few crucial updates that will still help your house stand out while staying within your area’s average price range. Most experts suggest that you not raise your home’s value any higher than 10 percent of the average cost of homes within your neighborhood.
But, if you live in a nicer area and your house, in comparison, is a little worse for wear, then you’ll want to spend a little more on renovations to keep in line with other homes in your area. So, before you grab the hammer and go to town, research what other homes in your area have sold for in the last few months. Look at the finishes and updates on those homes so that you can get a better idea of what you should be spending your money on.
What Features Should You Invest In?
Your ultimate goal is to try to give potential home buyers the features that they’re looking for most. For instance, most home buyers look for updated kitchens, master bedrooms, and bathrooms. These spaces alone can make a sale, so consider investing extra money in those three areas. Then, if you have funds left over, you might consider replacing flooring or upgrading small details, like lighting, fixtures, and doorknobs.
Whatever it is that you decide to do, use your budget wisely. You might even consider where you can do DIY projects to save money. For instance, if you can’t afford to replace your kitchen cabinets, consider painting them instead for a nice, clean update that requires little investment.
When it comes to down to it, renovating your home requires you to make informed decisions based on the current real estate climate, the area you live in and the features buyers want most. So, if you do your research and follow market trends, you can end up with a nicely renovated home that appeals to a large range of your target buyers.