Should I Renovate Before Selling?
Charlotte realtor Thomas Watson weighs in on today’s market and the best course of action for sellers.
With today’s highly lucrative seller’s market, we’re seeing homeowners using this as an opportunity to upgrade their current homes in favor of a home more suited to their current lifestyle. Some are downsizing after their children have moved away, others are relocating to more affordable cities. But we’re most excited about the folks that are taking advantage by finally building the custom home they’ve always wanted.
With one important step of this process being to sell their existing home, many future custom builders wonder: is it worth renovating my home? We asked Charlotte real estate expert Thomas Watson for his take.
When sellers ask you if they should renovate or not, how do you usually advise them?
First, it’s important to distinguish between a renovation and a clean-up. Renovation includes redoing a kitchen or bathroom, or adding a major addition.
Overall, my best advice is to put yourself in the buyer's shoes, and think about what you would want fixed.
I love to apply the golden rule to real estate. Do for other people what you would want to have them do for you.
For example, when you're selling your house, do you want to leave a refrigerator with a burnt out motor in there? It's best just to take it out. It's small things like that. People know, but they just need a little bit of reinforcement, a little bit of leadership, making those decisions.
What do buyers pay most attention to when looking at a home?
The top priorities are always the kitchen and bathrooms. When those are updated, it can go a long way for the value of the home.
In addition to focusing on what to highlight, we also need to look at things that could be detractors from the sale of the house. Number one is curb appeal. If you drive up and the yard is not landscaped, or nobody's ever groomed the shrubbery hedges, that stands out. That matters.
Not only does it matter because it impacts the physical look of the yard, but it also tells anyone who's looking at the property that if these people haven't taken care of the landscaping, then there must be something else that's not taken care of.
I also look at the front door. If it’s falling off the hinges, that's a negative introduction to the rest of the house.
Does the current market warrant different renovation advice than years past?
Yes. Right now in Charlotte, there's very limited inventory.
Buyers have been trying to bid on properties and failing. They're upping the ante by raising not only their offer price, but their due diligence and earnest money amounts. They're waiving appraisals, they're waiving inspections, all of it.
As an agent who represents the seller, I still say we need to do our due diligence. We need to make sure the property is represented properly. That happens through the property disclosure. If there's something that is a material fact, that's going to hinder the sale of the property, we need to disclose that, which is why these are still things that we need to take care of no matter what type of market we're in.
Sellers need to know that even if you get that sweet deal and get your house under contract, we're still going to have issues if we haven't taken care of those other things like repairs.
It’s important to keep perspective about what we’re trying to achieve, and be flexible to get there. Most sellers are trying to save money, regardless of why they’re moving. But just because sellers might be able to get away with refusing repairs in our current market, doesn’t mean they should. That’s generally not what’s best for either party.
When we’re trying to sell your house so you can go on and live out your dreams, and the buyer wants to buy the house so they can move in and live out their dreams, is it really worth it to get hung up over $1,000 repair item?
That's where we come in as agents. Real estate is a people business. We understand that our job is to have both parties come to agreement, or we're not going to have a closed transaction.
Considering the seller’s market, what do you typically recommend?
It depends on the property, the location, and the circumstances surrounding the finances of the seller and the current state of the home. Sometimes there are sellers who can afford to do XYZ to their house. Those things might cost them $20K, but if the improvements are likely to bring in $35,000 more in this market than trying to sell it as is, then of course I’d advise them to go for it.
It’s a numbers game, but it doesn’t just depend on what they’re willing to put in. It’s also about what the return on investment is going to be. The reality is, we can’t always predict that specific amount. Every buyer is different, they look at a property differently. No matter what you do to it, depending on the buyer, they may or they may not like it, or they may want to do something different. So I wouldn't tie up too much money in a property and renovations that you're going to sell, especially in a seller's market.
Overall, cleanup and repairs are going to be worth the time and money to make your sale as smooth and profitable as possible. Beyond that, many homes don’t need much else in this market.
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