July 26, 2023
As a homeowner, you want to get top dollar for your property, but how can you afford the updates and upgrades you need? We have all the information you’re looking for about pre-sale home improvements.
As a homeowner, you want to get top dollar for your property, but how can you afford the updates and upgrades you need? We have all the information you’re looking for about pre-sale home improvements.
Home valuations have hit record highs in markets throughout North America, driven in large part by the low inventory and low interest rates that accompanied the COVID-19 pandemic. In highly desirable markets, multiple offers over the appraised value have become the norm and sellers are enjoying unexpectedly high levels of equity.
For some homeowners, however, hopes of a profitable sale are at risk due to deferred maintenance, out-of-date aesthetics, and designs that are out of step with the rest of the neighborhood. The good news? There are a variety of effective ways to increase property value before selling your home to a potential buyer.
You have plenty of options for adding value to your property. Some are expensive while others cost little or nothing. Some are what’s referred to as “back of the wall” improvements – the kind that doesn’t show up in photos or on a home tour. These include new HVAC, upgrades to the electrical or plumbing systems, or new insulation.
Other improvements contribute to curb appeal and can pay big dividends for a relatively small expense. Simply cutting the grass and refreshing the landscaping can have a major impact on the way a home looks to potential buyers. Similarly, painting the front door, power washing the walkway, or adding new house numbers can give your home an instant boost. These improvements can be cost-effective and time-effective, especially if you are trying to balance how to buy a house while selling your own
Of course, there are major home renovation improvements that require time and the help of professionals to achieve. These can include a kitchen remodel, bath upgrades, new flooring, and other more extensive changes to the home. It can also include changes like new windows, a new roof, and new exterior doors which add value through increasing peace of mind for the buyers who can rest assured that these major updates have been taken care of before they buy.
Interestingly, home improvement is not a question of “a little is good, so more must be better.” In fact, you can make the value of a house go up too far, in a sense, if you make improvements that are out of step with other homes in the neighborhood.
For example, imagine you have a home in a charming in-town neighborhood full of bungalows that are heavy on vintage appeal and mid-century modern style. You could go all-in on a full-house renovation that turns that small property into a three-story, ultra-modern showplace with high-end fixtures and finishes throughout. You’d spend a great deal of money but you probably wouldn’t see much return on your investment since potential buyers in that neighborhood wouldn’t be looking for a huge modern home.
Similarly, you can spend money on the wrong things and undermine your home’s value. If you have a sprawling luxury home and replace all of the appliances with the cheapest possible ones that you could find at the big box home improvement store, you will have wasted your money. Far from making the home feel updated, these inexpensive appliances will turn off luxury buyers who will feel the need to replace them as soon as possible.
In addition, you’ll want to find out if the price you’ll pay for an improvement is likely to impact the value of the house quickly enough to be reflected in the sale price. In some cases, value-added improvements are calculated as a combination of the way they improve your life during the years you own the home along with their impact at the time of sale. A major and expensive home repair completed right before your home goes on the market is unlikely to come back to you on a dollar-for-dollar basis. If the project takes longer than expected, it could affect how long it takes to sell the house.
For this reason, it’s a great idea to sit down with your trusted real estate agent to discuss value-added improvements you can make that increase your chances of selling your home quickly and profitably. They can help you zero in on what buyers want in your market and what types of changes could pay dividends both in reduced days on market and increased home value.
In today’s market, there are many options for adding value before you sell. Carefully planned, with a budget and local market preferences in mind, these have the potential to add to your bottom line at the closing table.
While structural upgrades or changes to your home’s infrastructure may be valuable, they rarely have the instant impact of improvements to the design and appearance of your home. Aesthetic upgrades can come at a variety of price points and complexities. The best thing, however, is that there are many changes you can make on your own in just a day or two that will make a lasting impression come time for your open house.
Interior home improvements can include any or all of the following:
Exterior home improvements can include any or all of the following:
Many of the interior and exterior updates and upgrades offer reassurance to buyers that they won’t be buying a to-do list filled with chores, repairs, and replacements. According to one poll, 38% of younger home buyers fear the prospect of unexpected repairs following their home purchase. Without DIY skills and left cash-strapped following their home purchase, a major repair could be a budget-buster for a new buyer.
Many back-of-wall repairs will offer added comfort to hesitant buyers, reassuring them that the home is in good shape. In addition, you can make these buyers more comfortable by providing information on service and maintenance you’ve had done on a regular basis along with warranty information for any appliances or systems that are still covered.
If you have some older systems and can’t afford to replace them, you may want to offer a home warranty for the first year of ownership, which can be obtained for around $500-600. If there’s a particular part of the home they’re concerned about, ask about add-on coverage to provide even more peace of mind.
Newer systems and appliances offer savings not only in deferred maintenance costs. They also, generally, use far less energy than older, outdated appliances. In addition, newer windows and doors make the home more energy efficient by reducing the incidence of air leaks. Add to that upgraded insulation for a home that is truly optimized for savings on your energy bill.
An on-demand hot water heater can save money every day by heating water only when needed rather than keeping a giant tank filled to capacity 24/7. If you want to take the savings even further, consider solar panels or other alternative energy features.
A fully integrated smart home system can provide additional convenience, safety, and energy efficiency as well. Connected entrances, appliances, entertainment systems, and security monitoring can alert you of problems even when you’re not at home. In addition, you’ll be able to control your home’s connected devices remotely with your phone or voice commands.
Square footage is one of the best ways to add value to your home, both when you list and at the appraisal. If you have an unfinished basement or attic, you may be able to make it into usable finished interior space. Otherwise, you can build an addition, either as an extension to the ground level or by building upward with a second-story addition.
Remember, don’t overbuild and make your home too large for the local market. Talk to your real estate agent about the average square footage in your area and talk about your options.
If you have significant equity in your home, you may be able to tap into it with a home equity loan or line of credit. You may also be able to secure a personal loan from your bank or credit union or finance repairs and improvements with an existing credit account.
Here too, you’ll want to keep in mind your post-sale plans. If you’ll be buying a new home once you sell your current one, taking on additional debt may lower your credit score and make it more difficult for you to obtain a home mortgage at a favorable interest rate.
Depend on Newzip to connect you with industry-leading real estate experts in your area – agents and brokers who are chosen specifically for the requirements of your home sale. Our agent finder connects you with a real estate professional who can give you the advice you need to get the most out of your home sale experience. They can also connect you with home improvement and repair professionals, home inspectors, appraisers, and others who can help you optimize every dollar of your home improvement budget.
