Is Avoiding Renovations a Good Strategy?
Sellers try to rationalize avoiding renovations to their homes before marketing them. They do this because they think it is easier and will let the buyer make their own personal choices. It is a convenient story to justify not going to the effort for the necessary market preparation. But this is an obstacle to achieving the highest possible sales price.
An Actual Example
An agent told us about a home on the market that was structurally sound, but that needed significant cosmetic work. This included paint, floorcovering, updated fixtures, and a significant amount yard work. The house was vacant and the owner had moved out of town. The agent explained to a prospective buyer what he thought it would take to bring the home up-to-date and what it would be worth. The buyer was from out of town and was going to be teaching at the university the next semester. He returned home without buying and came back to look again two months later.
The prospective buyer asked about the previously viewed home that needed work. The agent told him that she had bought it and did all the things that she had suggested. The buyer asked to look at it. On seeing the property, now, in its pristine condition, the buyer asked the agent if she would sell the home to him at a profit.
Seeing the Actual Property Value
The agent told him that it wasn’t for sale but asked the buyer why they didn’t buy it before at below market rate and make the changes themselves. The buyer said that it looked like a lot of work and that he just didn’t want to take it on. He just saw a lot of work and couldn’t see the finished product, so he passed on the house at that time. Once renovations were made, the buyer could see the true value of the house.
This story is not unique. It happens frequently. Buyers are not experienced enough to recognize what needs to be done, how much it would cost and how long it would take. In many cases, they don’t have the connections with the different service providers. In others, they simply can’t imagine what the home would look like after the renovations are made. Therefore avoiding renovations and repairs hampers your ability to sell.
Are There People Who Want to Do-It-Themselves?
There are some buyers who scout out opportunities for do-it-yourself experiences where they can earn sweat equity by buying below market and making the repairs to add value to the home. There are many more buyers who don’t know how and/or may not want the hassle to do the needed renovations. They are willing to pay a higher price to be able to just “move in” to their new home.
Majority of Buyers Need Help to Renovate
A highly popular TV series, Fixer Upper now, uses this situation for the premise of each show. People want to buy a home in great condition but can’t find what they want. Chip and Joanna Gaines find a good home in a good neighborhood for them and sell the vision of what it could be. The unique aspect of the show is that Chip and Joanna act as agents, designers, and contractors to meet the buyers’ budget.
In the case of Fixer Upper, the buyer is the beneficiary of the increased equity for having taken the risk to make the repairs. For the seller to be the beneficiary, they need to do the updating and repairs before marketing the home.
Ask Your Agent to Help Maximize Your Sales Price
Ask your agent if they can provide suggestions of what items would most benefit from remodeling and if they have service providers that they can recommend. The proceeds from the sale of your home belongs to you and to maximize them, it needs to sell for the highest possible price. Your agent can work with you to make that happen.