Fix Your Home vs. Buying a New One?
This is the type of question where you’ve got to focus on several different factors. For example, we need to know the degree of severity of the home itself. In addition, we need to know what the house market is like at the same and the probability of receiving a return on investment.
Selling your Home
The severity of your home will play a huge role. We all know of somebody’s house who needed such massive renovation that it wouldn’t work in terms of receiving a return. So what is the cost of renovation? This is something you’ll need to determine. Think of the following scenario. You’re stepping into a near uninhabitable zone with scarred walls and rotting wood. The bathroom is replete with deeply embedded stains and the shower wasn’t even operating properly. The taps were leaking and there was some sort of infestation going on just to make things that little bit worse; not that they were good of course. This type of warzone can hardly even be called a home. It’s stopped becoming a home a long time ago and has instead become a construction site. A real estate agent would have little choice but to value this home extremely low in order to attract the buyers who are willing to put the effort in. However, in a bad market, no low price is going to work.
Ask yourself what buyers are looking for?
Some home buyers want to buy a fixer upper home, but generally these buyers want a home that will require light cosmetic repairs. Buyers who gravitate toward fixers are those who either don’t qualify to buy a more expensive home or those who want to make a profit by fixing the home themselves. Fixer-upper buyers will discount the price of the home to allow for the repairs and, for the inconvenience, a bit more. Say, a home is worth $100,000 fixed up, but it needs a new roof. A new roof might cost $10,000. A buyer most likely will not offer $90,000 for this home. Otherwise, they could buy an identical home with a new roof for $100,000 and not have the hassle. A buyer for this type of home might offer $75,000, or even less. In this scenario, a seller would be smarter to pay for a new roof and sell the home for $100,000. Moreover, many buyers will not buy a home that needs a new roof. They will worry the work involved will cost more than what they anticipated. Perhaps replacing the roof would involve tearing off the sheathing and repairing rafters, which could add to the cost. Most buyers want a home that is in move-in condition. By not making repairs, you will limit the number of buyers who may be attracted to your home.
What to do before fixing your home
Smart sellers will weigh the cost of proposed improvements against the home’s market value after the repairs or upgrades are completed. If an upgrade won’t return the investment, such an improvement might not be warranted. Before you decide to lift the roof and install skylights in the master suite, realize that kitchens and baths carry the highest return. Before deciding to make specific repairs before resale, take an afternoon off to tour other homes in the neighborhood. Note the condition and amenities in those homes. Compare these homes to yours. If, for example, most of the homes on the market have upgraded kitchens, you should concentrate on fixing the kitchen. This doesn’t mean you need to buy designer appliances and tear out the cabinets. But a minor kitchen remodel might be a good investment. Sometimes, a fresh coat of paint on the cabinets and new hardware can give your kitchen an all-new look. Make a list of everything that is defective, broken or worn out. If buyers spot problems or malfunctioning systems, they might wonder what else in the home has been neglected. Buyers to whom I showed a $1.5 million-dollar home in the Fab 40s in Sacramento passed on that home due to the sellers’ slight oversight. The entry way rug had a big rip down the center of its seam, and it was ragged. That rug made a bad impression on the buyers to such an extent that they were convinced the sellers didn’t care about selling their home. So what can you do to fix your home? Take a look below to find out:
- Patch all holes and cracks in walls and ceilings.
- Fix all broken appliances and HVAC systems.
- Repair leaky faucets.
- Replace worn carpeting.
- Repaint dark or marred walls with neutral paint (not white).
- Replace broken windows.
- Repair the roof.
- Change out dated light fixtures / ceiling fans.
- Replace old linens / window coverings.
- Fix code violations.
If your real estate market is extremely hot — a seller’s market — you can get away with fewer fix-ups before selling; however, a home that needs repairs will still deliver a lower price. In slow markets — a buyer’s market — buyers might not even look at a home that needs work, unless it’s an REO.
Purchase Loans – Call us today at 424 225 2167 for help. One of our mortgage professionals will help you get the best possible Purchase loan California solution for your situation. We’ll be with you every step of the process and not hand you off to someone else.