Friday, January 25, 2008

Ask the Expert - Should I Remodel Before Selling?

Question: I am about to put my home on the market. I spoke with a couple of agents. One said I needed to replace the carpets and paint before I sell. Another said I should redo the kitchen. But another said the house is OK to show now. I'm really confused. Should I remodel or not?

Answer: With that wide range of advice, it's no wonder you're confused! Without seeing your home, it is impossible for me to give you specific suggestions, but I can give you some guidelines to help you sort out what is the best course of action.

First, you need to have an accurate perception of your home's condition. From your question, I am assuming we're not talking about serious structural problems (broken stairs, falling retaining walls, etc.). Instead, you are asking about cosmetic issues. For most of us, it is very difficult to see our home as others do. You might want to ask a friend to walk through the home and give you an honest assessment of its cosmetic condition. You want to stress that you are prepared for some brutal comments and will not be offended to learn that the clown collection you have so prominently display in your living room looks ridiculous to others, or that the sea-green color you chose for the bathroom makes people nauseous.

Now that you have your list of "problems", prioritize them. Some problems are cheap and easy to fix and you should do them. Clutter usually comes under this category. Pack the clowns away. Remove excess furniture and clear away some bric-a-brac. You might consider renting a storage space if you don't have room in your home to hide these items. But you don't need to go overboard. There are some Realtors who believe that a home should be "sanitized", that all personal items like photos and mementos should be removed. I don't agree. I like showing a place that feels like someone's home rather than a motel room.

Next, consider doing upgrades and repairs that are inexpensive. Are there areas that need a fresh coat of paint? If you can do this yourself, this is a relatively easy and cheap fix and will certainly brighten up the home. One of the agents suggested you replace the carpet. If that carpet is not damaged or badly stained, perhaps a deep cleaning would make it acceptable. Small repair jobs should certainly be considered - recaulking bathtubs, fixing cabinet doors, replacing broken electrical faceplates - all these can be done for minimal amounts of money and effort.

Now to the big ticket items. This category usually includes things like remodeling the kitchen or bath, replacing carpet, etc. These take time and money. Do you have both? If not, then this is a moot point. But the bigger question is, should you, for example, remodel your kitchen before selling? In my opinion, unless the kitchen is in very bad condition, the answer is no. A home with a remodeled kitchen may sell faster than one without, but you almost never get back the money you spent for the remodel in the sales price. And more to the point, the buyer may not like what you're done.

As an example, let's say you decide your carpet needs to be replaced. Not that it's torn or horribly stained, but it looks "tired". So you spend $5,000 and install a lovely, good quality tan Berber. A buyer walks in the door, and says, "this is a nice house, but that tan carpet will look terrible with my furniture. The first thing I'd need to do is rip up this carpet and put in a different color. So I'll offer $5,000 less to make up for the cost of a new carpet." Now you're out $10,000 - $5,000 for the carpet you installed and $5,000 in reduced sales price. Instead, you might consider listing the home "as is" but with a $5,000 credit to the buyer for new carpeting. That way, the buyer can put in what they like and it has only cost you $5,000.

The bottom line is that you need to start by looking at your home through a buyer's eyes and getting a real sense of what needs to be done. Do those things that are cheap and easy. Next, consider those things that will give you the most "bang for your buck". And finally, for those items that are expensive and time consuming, consider a giving a credit-back to the buyer.

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