It’s the age-old question that every prospective seller asks their Realtor: should I renovate the house and hope for a higher price? Or should I sell it as is and hope for a quick offer?
The answer lies in three little words: ROI (return on investment). Before you advise someone to start knocking down walls and ripping up carpet, be sure you’re recommending upgrades that will pay off. Here are the top five with the best potential for putting money in your client’s pocket (and yours) at closing. You’ll do your clients a favor by sharing this advice.
- Get cooking in the kitchen
- Remain neutral
- Get outside
- Make a point of it
- Count the cost
Get cooking in the kitchen. This is one room where almost any improvement will pay off. Think “clean, streamlined, updated.” Learn about what’s in—like stainless steel appliances and granite or quartz countertops. A couple coats of high-gloss paint can transform outdated cabinets at half the cost of brand new, and adding quality door and drawer pulls is a nice touch. If you can, get a look at the competition. What’s for sale in your neighborhood and what do those kitchens look like? Make sure yours is better and brighter.
Remain neutral. Inside or out, a coat of paint works wonders. Resist the temptation to add that orange accent wall, however. And avoid bright white, which seems cold and unwelcoming. Warm neutrals are the best choice, and lighter is better. Think of how many coats it will take to paint over it if the new owner prefers a different shade. If you can’t resist a touch of color on the exterior, put it on the front door, the shutters and other exterior trim. A light, neutral exterior with a bright or dark trim is eye catching. For example, a pale yellow or cream with dark green trim consistently gets the best reaction from drive-bys.
Get outside. In most climates an outdoor deck or patio is one of the biggest winners you can choose, especially since either one may be a DIY project for homeowners. Buyers see this as an extension of the home and it makes the property seem larger, with more usable square footage. Stick to basics and don’t waste your remodeling dollars with costly upgrades, like fish ponds, waterfalls, or swimming pools, however.
Make a point of it. Look at each room and the view from the curb as well, and think of one simple thing that will make everyone go “wow!” Maybe it’s a high end double door stainless steel refrigerator in the kitchen or a simple rock garden where the weedy front lawn used to be. Often such changes are portable and might even go with you when you move. For example, a mirror over the fireplace will make your family room seem twice as big. A new chandelier can take your dining room from ordinary to elegant.
Count the cost. Conventional wisdom says that you shouldn’t spend more than 15% of your home’s value in remodels and expect to get your money back. In today’s market, we’d recommend even less than that—try to keep it to 10%. If you have DIY skills, invest sweat equity and do as much of the work yourself as you can. But don’t overestimate your own abilities. A new roof or a flooring upgrade usually needs the services of a professional.
And there’s also a concept called “cost to cure.” You need to figure out how much each job is going to cost you, as well as how much it will take to undo it if the new owner wants something different. For example, one of our clients re-carpeted the entire house and installed all new window coverings. The house sold and the new owner promptly ripped out all the new stuff and repainted the just-painted interior as well. Bottom line: it would have cost the seller less, both in terms of money and stress, to sell the home as is and let the new owners have their way with it.
What NOT to do. As long as you’re counting the cost, there are a few things that you should avoid even thinking about, because the payoff is simply not there. Home theaters were a big fad recently, but today’s buyer may see that as an unneeded extravagance. The same applies to whole-house sound systems, built-in aquariums, and instant-hot water heaters. Don’t bother turning the unfinished basement into a game room either. In some places, the basement doesn’t even count in the home’s square footage for appraisal purposes.
When you’re making the choice between renovate or sell as is, base your decision on your budget, your community, and your sense of urgency. Don’t roll the dice on high end upgrades and end up overbuilding the neighborhood. Go with what’s reasonable to stay ahead of the competition and spend the minimum necessary. Unless, of course, you are in no rush to sell and you can plan to enjoy your investment for a while before you sign the papers.
What about you? Got something you want to add? Leave a comment below.