Home sellers – head this warning. If the only positive thing that your agent can say about your home is that “it has a nice lot“, then you need to do some upgrading.
At our office meetings we are able to promote new listings. The office manager pulls up the listings on Real Living HER’s web site so we can view the photos while the listing agent discusses the features and details of the home. Sometimes the agent will mention other special notations about the listing without divulging anything of a confidential nature.
Because my office is located in Worthington many of the listings are in Worthington which has mainly old or older homes. A lot of them haven’t been updated since they were built. “Hey, if it ain’t broken, don’t fix it”. The carpet may be worn. Some have wall paper that was popular eons ago. Appliances may be outdated – remember harvest gold and avocado green. Bathroom tile may be mint green or Pepto Bismol® pink. Basements may be finished with knotty pine paneling.
Because updating such a home is a major task and expense, sellers are often reluctant to want to spend the money to do it before putting it on the market. However, potential buyers feel the same way. They want to buy a home that they can immediately live in. They don’t want to spend thousands of dollars fixing up what someone else didn’t want to bother with.
Is this a good strategy? Generally not. First of all, the price will need to be low enough to reflect the cost of the upgrades, such that when the improvements are made, the resulting cost is AT the current market.
Home Price + Cost of Improvements = Market Price
Buyers often aren’t very knowledgeable about the cost to upgrade and generally will overstate the cost to make the upgrades. For instance, putting new carpet in a room may cost only $2000-$3000. Buyers are apt to estimate it to cost $5000-8000. If they do decide to write a purchase offer, they will use the higher figure when they discount the list price.
Market Price – Cost of Improvements = Maximum price to pay
Some of the homes mentioned in today’s meeting were in need of updating and the sellers were unwilling/unable to make the improvements. This left the agent to explain that the “home needs updating – but, it’s got a GREAT lot”.
If you don’t want your home to be described in this fashion, do at least some of the updates. It can be a well spent $5000-6000 because you’ll likely get it back with a higher price and a quicker sale.
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