March 26, 2015

Who knew selling your home could cost so much??

Whether you are relocating for work or your family has outgrown your current residence, the process of selling your home is always a difficult one.  Over the years, you have changed paint colors, brought in new flooring and purchased furniture that reflects your individual style.  Unfortunately, your realtor will likely tell you to get out your checkbook because undoing those changes is crucial to getting your home sold.

The psychology of purchasing a home

You may be asking yourself, why do I need to invest more money into a home that I am trying to sell? Selling a home is based on one principal: creating an environment that a potential buyer can envision themselves living in.  In the same manor that you added your own personality to your home, a potential homebuyers wants to do the same.  It is difficult for someone to do this if the kitchen is a fiery red and the bedroom has shag carpets.  Although these are quick fixes, a potential sale can be lost as quickly as opening the front door.

So what are you supposed to do?

Many people are selling their home out of necessity and are already pinching pennies.  When a realtor tells you that all of the walls need to be painted and the floors refinished, $5000 can disappear quickly.  The first step is to create a budget.  It is important to map out how long you can potentially afford to stay in your home and if you are relocating, how long can you leave the home vacant.  Whether you live there or not, taxes, utilities and mortgage bills will continue to show up in the mail and having a realistic timeline is imperative to plan for improvements.

Pick and Choose but Choose Wisely

Now that you have a budget in mind, it is time to create a checklist.  This list should encompass a few categories.  The first is necessity, this is the work that must be done before you can list your home.  Items include anything that an inspector will red flag and potentially ruin a sale that may already be in the works.  The next category is major repairs. This will include roofing, kitchen and bathroom updates and other big ticket items that may not be crucial but would add significant value to the home.  The final category is cosmetic improvement.  This will include paint, flooring, window cleaning and other small ticket items that will spruce up the home and bring in warmth.  After you have compiled your list, it is time to start getting some quotes from contractors on what needs to be done.

Comps and Assessment Value

Now that you have your checklist and have gotten some estimates, it is time to look at the “comps” in the area.  There are a number of free websites and apps out there that will allow you to see what is listed in the area and what has recently sold.  Your goal is to find a few comparable properties within close proximity and see what they are selling for.  Based on your last assessment, you can now see exactly how much you should put into your improvement projects.  If you are already assessed close to what has sold in the area, focus on smaller cosmetic projects.  If you are assessed at $50,000 less and have some money to work with, it might be best to focus on big ticket items and update the kitchen and bathrooms to maximize your profits.

Is staging worth it?

After doing all of your homework and completing all the necessary projects that seem the most economical, your home is finally listed on the market.  It has been a couple months and you are still not getting any interested parties.  You have painted the walls and refinished the floors but the realtor’s response from potential buyers is that the home is cold and unwelcoming.  This maybe the best time to call in a staging expert.  These are professionals who will come into your home and add subtleties of furniture, artwork, and decorations to create a warm environment.  It may be just the push you need to get your home sold. 

As the old saying goes, you have to spend money to make money.  If you have plans on selling your home, it is important to factor in all of the additional costs and prepare your home so that you can get it sold as quickly as possible.