Your hard work and expense may lower the market value of a property you wish to sell. Surprised? Don’t be. Generally people believe that by really dolling up a property they will maximize their sales price. That is frequently untrue and problematic at best.
The majority of real estate owners improve a property being prepared for sale. The problem is that many of them make decisions regarding the improvements they choose based on their personal tastes, preferences and the things that would be important to them if they were buying. Unfortunately those things may be more of a stumbling block than a stepping stone to the sale.
First; opinions on what is important and appropriate differ from person to person. The colors you pick to repaint may clash with a buyer’s vision for the property. The new basic tile you install may be a negative for buyers who want to do something unique after their purchase. The new appliances you buy may hinder a sale because a buyer may have contacts where they can buy appliances at a deep discount thereby reducing their overall costs. The new roof you put on may be a conflict with the color of stucco that buyers may want to do. The new carpet you put in the hallways may conflict with a buyer’s design elements. In all these cases, your work and expense will hinder the sale, not help it.
Second; this does not mean that you should not prep a property for sale. I’m just suggesting that you do it right. Here are three simple rules that you can follow to make your investment in time and money are penny wise and not pound foolish.
- Stick to basic earth tones and colors that are non offensive. There is a reason that virtually all spec homes are painted off white inside. It makes the rooms look bigger. It looks clean. It also allows buyers to easily paint over the walls they wish to personalize without the need of putting on two coasts of primer first to hide a darker incompatible color. Carpets that are earth-tone hide dirt. Enough said.
- Do not do any major replacements of appliances, FFE or HVAC units unless they are out of commission. Better to give concessions on things reflecting personal preference and tastes than in replacing them prior to sale. These include cabinets, carpets, bath and kitchen fixtures, etc. Buyers want everything in working order and understand that they will be bringing their own influences to bear in the property after purchase.
- No matter what you do, leave some room for an increase in value for the buyer. Let the buyer know that they can do the improvements themselves and thereby increase their value (either competitive market value or the real financial value based on and increased NOI with higher rents and lower expenses). People are far more likely to buy a property where some of the profit is left in the deal for them, than they are in stretching into a property that may take years for its value to increase enough to cover the costs they will invest after purchase.
So, in closing, when it comes to improvements, do only what needs to be done and do it wisely. It will save you time, effort and money. In most cases, you’ll walk away from the closing table with what you would have if you had done the improvements yourself.
Good Luck in your career. We’re glad to help if we can.