Before listing your home for sale on the market, you may be tempted to remodel to fetch the best price possible. But not all home renovations offer the same return on investment. Some renovations may increase the value of your home – and how quickly it sells – while you may lose money on others. Before hiring a contractor, here are some factors to consider if you’re pondering whether to renovate before selling your home.
Your Home’s Condition
Depending on your home’s age and how well you’ve maintained it over the years, it may not need renovations to make it market ready. But if your home has slipped into fixer-upper status, you may benefit from renovations.
Before you start any home renovation project, invite a few local real estate professionals to tour your property and give their opinion. As they tour the property, take note of areas they think need an update to get the best price possible when you sell.
Ask each agent to provide you with a seller’s net sheet, which tells homeowners how much profit they might make from their home sale based on current market conditions. From the report, you can identify updates that should be made to increase the value of your home and projects that aren’t worth the time and money.
The State of the Market
The state of the housing market is one of the biggest factors in determining whether you need to remodel your home before selling. It all comes down to supply and demand.
In a buyer’s market, there are more homes available than buyers looking to purchase. Having an updated kitchen and bathroom may help it stand out from other comparable homes, which could help you sell faster.
In a seller’s market, demand for homes is greater than what’s available for sale, and buyers may be willing to purchase a home “as is” without major or minor updates.
Your Timeline
Are you in a hurry to sell, or can you take your time? Even basic renovations can take weeks to complete, particularly if you’re hiring a contractor to do the work.
If you’ve already found a new home and want to avoid multiple mortgage and utility payments, skipping the renovations will save you time and money. The longer you wait to list your home, the longer you’ll have to pay for two homes.
Additionally, if the purchase of your new home is contingent upon selling your current residence, you may lose the property if you don’t find a quick buyer.
In urgent cases, such as if you’re moving out of state for a new job, even listing your home on the market may take more time and effort than you can spare. You may want to consider selling to a company that buys houses for cash. Those transactions can be completed in as few as two weeks.
Of course, there are some exceptions to the rule. Light renovations — such as painting walls, steaming carpets, and replacing old fixtures — can quickly add significant value to your property.
Return on Investment
Ultimately, you should consider the return on investment when deciding whether to renovate your home before listing it on the market. In general, cosmetic updates to your kitchen and exterior will have the greatest returns.
Inside your home, the kitchen is typically where you can get the best return on your investment, even with light updates. Kitchens are the heart of the home and one of the few rooms used by everyone in the house. Fixing broken cupboards, replacing a chipped backsplash, and other DIY projects in the kitchen can increase your home’s value to prospective buyers.
Your home’s exterior is the first thing potential buyers see when shopping. You can attract more buyers with minor updates, such as painting the trim and replacing the front door. It’s also important to keep your lawn, trees, and bushes maintained while it’s on the market. Adding a few potted plants or filling your flower beds can give your home instant curb appeal.
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