The Mind of A Seller VS. the Mind of A Buyer
In our experience, there is a different calculation that goes on in the mind of the seller, compared to that which is in the mind of a buyer. For instance, if the carpet in your bedrooms is original carpet in your 18-year-old home, there is likely no life left in it, we can all agree. If the seller were to replace it with something mid-grade, they could foreseeably spend about $1,000 – $1500, roughly. When the buyers see the need for new carpet, they calculate about $3,000 for said carpet, and they will menatlly subtract that from the price they are willing to pay for the home.
I can’t specify exactly what the reasoning is, whether buyers want the option of upgraded carpet, or whether they pad the estimate with compensation for their effort, but I’m almost willing to create a mathematical formula, I’ve seen it so often.
Now add to that old appliances, older roof, HVAC, flooring and siding. These things may not all be worth the sellers attention, but all together, they add up in the mind of the buyer.
If a seller is not able to repair and renovate, or isn’t willing, then they need to be prepared for lowball offers, or perhaps no offers, depending on their list price. They cannot expect to get market value if their home doesn’t show well. Buyers will be overwhelmed with the number of updates needed, and if they are interested in doing the work at all, they certainly will want the home for a bargain.
Most Buyers Want A Move-In Ready Home
If at all possible, making the improvements before putting the house on the market will be to the sellers advantage. The majority of buyers want a home that is move-in ready. By addressing the condition of your home, you appeal to the majority of buyers, rather than that small subset of buyers looking for a fixer-upper.
The bottom line is: if you want top dollar, your house should be in the best condition possible. A buyer should be able to move right in without having to do a single repair. That means the major systems should be in working order, the home should be clean with a coat of fresh paint. The carpet should be fresh and the floors in good repair. Lighting and fixtures should be updated and colors should be neutral. Anything that is dated needs to go!
What If It Can’t Be Done?
I understand, some sellers are in a situation where they are unable to make many updates and renovations. In that case, they should do as much as they can to make the home as updated as possible, and then they should price the home accordingly. If similar homes have better amenities, your home will have to be priced below the average price that those homes have sold for.
It’s About Expectations
This goes to a seller’s expectations…if you understand that you won’t get top dollar and price your home accordingly, then you should have success. If you try to get a higher price…to “test the market”, then count on being on the market longer and count on lowball offers. Even as you drop your price, the length of time on the market will add up and you’ll face having a “stigmatized house”. Buyers will naturally wonder, “What’s wrong with that house that it has been on the market so long?”
Your agent should make you aware of the average time on market for homes that comparable to yours, in size, age, neighborhood and general condition. If your home sits on the market longer than normal for those comps, that’s the market telling you something.
Some Maryland Contract History
Historically, the Maryland contract of sale specified that the systems of the home must be in working order, so if a buyer had a home inspection, these items would come up and the seller would be required to repair them. Plumbing, HVAC, electrical systems and appliances are included in the general category of “systems” by Maryland law. But that all changed when the contract language changed in the last decade. Today, there are no requirements; everything is negotiable.
This means that no longer is there a “must-do” element to the condition of your home…everything falls into the category of what is the most prudent and what is the most advantageous, given your goals and circumstances.
This is when you really must know what features and amenities your competition has. You must understand what condition similar homes are in and what prices similar homes have sold for and are currently listed at. Keep in mind, sold price is much more important than list price when it comes to comparative homes on the market. Having an experienced listing agent who is familiar with your market is of utmost importance.
Where to Start
Do you need to update something major? Like the roof, the HVAC, or refinished hardwoods? Some items are worth going the extra mile, some are not. With some updates, you may want to spring for the best available, depending on the comparative homes in your market. For example, architectural shingles are not that much more than the basic type of shingles, but look so much better, especially if they are the standard for the neighborhood.
On some items, like carpet, you may as well go with a mid-grade quality, because top-of-the line flooring won’t give you a better return on investment. To learn more about ROI, visit Remodeling Website. There you’ll find a list of renovation projects and how much they get as a return on investment, broken down by region of the U.S. This is a good resource to see where to spend your renovating dollars. We also keep an updated article on the topic: Home Improvement ROI.
Small Changes Make a Difference
Don’t forget the small items. Changing out light fixtures can make a big difference for little cost. Faucets and knobs are also a low-cost fix that can bring a home out of the 80’s into the 21st Century.
Painting is always a good investment and one of the least expensive updates a homeowner can do. Along with cleaning and de-cluttering, doing small repairs and updates will be worth it. There are many small home improvements that make a big difference. Whether to update your home or sell as-is, a topic that many real estate agents have written about:
- Improvements that will Boost your Home’s Value, written by Bill Gassett, Metrowest Massechussetts Realtor.
- They’re Not buying our Home…Why? by Las Vegas Realtor, Debbie Drummond.
- Getting Ready to List Next Year, by Dan Miller, Madison WI Realtor.
- Getting the Best Service Professional, by Wendy Weir, Relocation specialist with Berkshire Hathaway in Birmingham, MI.
- Preparing Your Home for Showings, by FishHawk Ranch, FL real estate agent.