Making Repairs Prior To The Sale
New. Just replaced. Upgraded.
Such sweet music to any buyer's ears.
Before your real estate agent puts the “For Sale” on your lawn, it is likely that you will need to make some repairs and improvements. But what kinds of repairs should you make? Do you repair larger items? Do you totally upgrade the basement? Do you hope nobody will notice?
A home in move-in condition appeals to more prospective buyers. It is a given rule in real estate that a house in good condition sells more quickly than one that requires upgrading. If your home is well maintained and shows well, many buyers could possibly make you an offer. With multiple offers, the price is likely to rise. This is not unusual in a hot market.
A home requiring a lot of work is less appealing to some buyers. Some people do not have the time, money or the inclination to complete the repairs. First-time buyers and those with a busy lifestyle generally want a maintenance-free home.
When considering repairs on your home, consider the market and your neighbourhood. In a hot market, perhaps you will not need to do anything. Perhaps, in a buyer’s market, your repairs and upgrades should be completed in order to achieve the best possible price.
Home inspections are popular
Many buyers will request a home inspection. This could work for or against a seller. Depending upon how it is written into the contract, a buyer could terminate the contract upon unsatisfactory findings or if specified repairs are not completed. He or she could also re-open negotiations. An unhappy buyer could also request a substantial discount for the cost of the repairs. The seller pays for it now or later.
Do not get carried away
Dollar-for-dollar, not all home improvements raise the value of your home. It depends on the cost and type of improvement. You could spend $30,000 on a backyard paradise, complete with mature trees, waterfalls, rock gardens and sprinkler systems. Will this mean your property is instantly worth an additional $30,000? Unlikely.
Many buyers like the idea of a garden and backyard. But a simple, attractive yard with a nice fence, swing set and flowerbeds is adequate. Most people are unwilling to place a $30,000 premium on a garden. If you spent $25,000 on Italian marble for your bathroom you would likely have the same result. While you are willing to pay the price, it may not significantly increase the value of your home by the same $25,000.
When you are considering renovations to your home, consider the cost and the neighbourhood. Select renovations that will not stretch your budget. Be mindful not to over-improve your home in regard to the neighbourhood. When it comes to buying a home, buyers seek the least expensive home in the most expensive neighbourhood they can afford. If your home has too many improvements, it may be priced at the high end of the local market. From a selling position, you may not get the best price. It may also take longer to sell your home. And, the longer your home stays on the market; you are more inclined to reduce the price to ensure a sale.
Perhaps you are planning to move in a few years and hoping to recover the costs. Canada Mortgage and Housing Corporation suggest the following as a payback range of typical renovations: