Renovations You Should Do Before Selling A Home
Q: Gerald, we are about to sell our home. We’ve lived here for many years and there are some things that need fixing. Which renovations should we do before we sell our home? Emily, Portland, Oregon
A: Hi Emily, that’s a great question and it’s one that I get asked all the time.
The best approach is probably not what you expect. Most of us want to get the highest price we can for our property when we sell so we often assume that it’s in our best interest to do repairs and renovations before we sell. Although it may seem counterintuitive, in most cases it’s not in our best financial interest to do renovations right before we sell because the return or financial reward we get on average for doing renovations right before we sell is only about 50% of the money that we spend–and that’s only in the 1st year after the renovation-our return or reward after the 1st year is even less than 50% of the money we spend renovating. In other words, on average, for every dollar we spend renovating before we sell only gets us another $.50 in increased market value on our home, which means that this renovation cost is a bad investment financially.
The exception to this occurs in the case where the conditions of the house are so bad that they render the place unlivable, for example if bathrooms, kitchens or a home’s electrical system don’t function the way an owner would reasonably expect–in this case a renovation or repair may be necessary to make a property attractive enough for a buyer to want to buy. But even in this case it’s important to weigh the renovation cost versus the expected increase in market value of the property.
The most prudent way to find out is to put the property on the market in it’s current condition at a reasonable price and see what happens. You can arrive at a reasonable price either by getting an appraisal or by getting a licensed and experienced Realtor in the area to perform a comparative market analysis on your home.
Keep in mind that a house is worth what someone else is willing to pay for it. So before you spend a lot of time, energy and money on renovations, which in most cases won’t generate a positive return for you, test the market and find out what your home is really worth now in its current condition.
Thanks for your question, Emily. Good luck.
For more real estate tips and information visit my blog at geraldlucas.com.