Friday, May 29, 2015

Fixing it up to Sell? Caution is Advised

Many home owners are starting to realize that this recent upward trend in real estate values has put them in a position to sell.This market is very strong but the buyers are seemingly focused on clean, updated and move in ready properties. Fixers seem to be lagging in this current market. In general it is a seller's market but fixers are still fairly neutral. These home owners that have a house that needs some maintenance and updating are sometimes considering improvements to their home to increase its marketability.

It is important to recognize that improvements to a property can be either positive or negative towards the end result of cash in pocket for the seller. Most improvements will add value to a home, but will they add as much to the price achieved in the marketplace as they actually cost to make? That is the 64,000 dollar question.

Some improvements do not add value at all. Here in the Pacific Northwest in-ground swimming pools generally cost more to put in than they generate in value. In fact a swimming pools in middle class homes are generally ignored by appraisers in this market. Southern Californians by contrast will pay for an in-ground pool and in fact it is almost a mandate.

Home owners need to consider only the improvements that will truly generate additional proceeds for them. Kitchens and bathrooms have long been held as areas that should be kept updated. Remodeling a dated kitchen might be expensive but it could bring more in cash than costs to do so long as the seller doesn't over do it. Over improving a house can be a serious mistake. A 1950s three bedroom one bath rambler need not have a $50,000 kitchen remodel. The home has a price ceiling based on its size, age and neighborhood. Generally, there is no room for that kind of remodel. A modest kitchen update however might cost the seller $3000-$6000 and net $10,000 more in price.

Other improvements for sale would be a fresh coat of neutral color paint throughout the house and making sure the first few rooms the buyer will see inside are tidy, and bright. The classic curb appeal is still a major factor so keeping the front yard spic and span so to speak are crucial. Additionally most buyers in the sub-$300k market locally at least, are going to use an FHA or VA loan. The seller is advised to make sure the house will meet the guidelines for these government backed loan products. These products are not that difficult to satisfy so their value is immense. The market is driven by buyers at this point. What makes a seller's home valuable is the surplus of buyers seeking homes. If the seller eliminates the majority of buyers by excluding the bulk of the loan products, then the seller will find that the house will sit on the market or be forced to reduce price.

This is as simple as making sure the siding is not in contact with the ground, the exterior paint is not peeling away and exposing the siding to weather, rood is free of excessive moss and debris, no water in the crawls space and the proper vapor barrier is in place under the house.

  • Front yard sharp and clean
  • First rooms and entry to home tidy and bright
  • Kitchen updated, bright and clean
  • Bathrooms bright and clean updated if possible
  • Interior fresh paint with neutral colors such as a light beige or antique white
  • Exterior to meet FHA and VA guidelines
Following these simple ideas will yield the best possible results. Buyers need to pull up to a sharp looking house. They need to walk into a clean and bright entry. These two alone will ensure a thorough look at the rest of the house and thus give the best chance of generating an offer.

This market is demanding clean, updated houses. So give them what they want and make a lot more money when you sell.

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