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Preparing Your Home to Sell: What to Fix

What fixes or updates should I do before listing my home?

This is a dilemma for many sellers. Each situation is unique so there is no single answer which fits every home. Though there are some general ways to think about this question.

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Let's start the discussion with some easy questions.

Is the home a tear down? If that's the case, then the answer is obvious. Do not spend any time, money, or effort on it. Sell it as-is.

Next, is the home a fixer? If it is a fixer then your target buyers are those who want to build equity by fixing the home. In this case, the best strategy is to broaden the pool of buyers who can afford your home. If the home is unsafe to live in, it may not be financeable by a bank.

Is it possible to fix the home just enough so it can be financed? If so, consider it because this will increase the leverage and therefore profitability for the buyers. If the answer here is no, maybe it was a tear-down to start with.

Next, is the home an investment property? If this is the case, then the answer is really simple math. Tenants want to live in a fully functional home but often don't want to pay a much higher rent just because the home is made cosmetically new. So consider who your tenants will be and try to figure out what rent they can afford.

Research what tenants expect to pay for rent in your area. If the home is in a median rent market, tenants typically expect the home to be very clean and modern, but not necessarily new. If the home is on the below median market, tenants expect clean and functional, but not necessarily a modern home.

Are the carpets clean enough for a tenant? They need not be new, but just clean so that a tenant can rent it. If the carpets can’t be cleaned, it is better to replace them. Here, there is no reason to replace them with a high end carpet. An economical carpet is good enough, since an investor is primarily seeing the home as return on investment. For a fixed rent, an investor is going to pay only so much for a house, so unless you can make a case for increasing the rent, an investor won't want to pay more either.

Now, is the home ready for the next owner? Typically an owner wants to buy a home and live in it as soon as possible. So you would be better off making the home move-in ready. This means fix everything broken or too ugly:

  • Are all the appliances working fine? If not, fix them.
  • Are any windows broken? If so, replace them.
  • Is the paint too dirty? Yes? Repaint it.
  • Is the lawn patchy or overgrown? Do some basic landscaping, such as mow the lawn or plant new grass where it is missing.

Generally, there is no need to do any upgrades. Any upgrade would mean that the seller is taking away the choices from a future buyer. For exampple, if you install a brand new carpet, the future buyer might actually prefer a hard wood floor or a different color carpet. Similarly, with any update you do, you are taking away choices from a future buyer. Therefore it is better to let a future buyer spend the time, money, and effort on upgrading the home.

There are some exceptions here though. Is it easier for the seller to update the house than to a buyer? As an example, does the seller himself have the skills of a general contractor or a handyman? Does the seller have a lot of free time so that the seller does not count his own time and effort? Does the seller enjoys planning and designing the upgrades? Is the home mostly upgraded, except a few areas? For the last question, it is better to say that the home is fully remodeled than saying it is 90% remodeled. If two out of the three bathrooms are already remodeled, then why not just complete the task of remodeling the last remaining bathroom too.

So the bottom line answer is, think like a buyer and their lenders. Unless the home is a tear-down, definitely consider whether the home is financeable and try to update it just enough. Otherwise consider making the home move-in ready either for a tenant or for a new owner. Take care of ugly stuff, but don't update the house unless you yourself have the skills and enjoy the work.

 

Know someone getting ready to sell their home? Refer a friend to Faira and get $200

Kamal Jain

Written by Kamal Jain

Kamal is the CEO and Co-Founder of Faira.com. A technologist and economist, Kamal specializes in designing business models for the internet, which he did for both Microsoft and eBay. Kamal now wants to align the interests of home buyers and home sellers with Faira.

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