With housing inventory at historic lows in many parts of the U.S., you might be hoping to capitalize on the market by listing your home. After all, it’s ready to go; you have a new roof, fresh paint, mulched beds, and you even planted flowers. But what about that dated interior? Should you update your home before listing it?
That depends. There are many reasons to update your home if you’re able to do so. Many buyers today want a turnkey opportunity—a home in move-in condition. An updated home may also compete better against others on the market, especially new construction. Perhaps most importantly, first impressions matter. Many buyers see your home first online, so a home that presents better may spark more interest.
“Your first showing is done before the buyer ever walks through the door,” said Josh Dotoli, a real-estate agent with Compass Florida in Fort Lauderdale, Fla. “The smallest details make all the difference.”
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But Mr. Dotoli doesn’t recommend piecemeal renovations. “If the entire house needs to be updated, make the presentation as good as it could be—clean, neat and organized,” he said. “Don’t worry if the house doesn’t match up to the latest design magazines. An older home that’s well cared-for shows it was loved and will attract the right buyer at the right price.”
In many markets, inventory levels are at record lows and buyer demand is strong. While buyers will vie for available homes in any condition, Jennifer Kalish, an agent with Douglas Elliman in New York City, said that many will pay a premium for a product that’s move-in ready. “This allows them to avoid the headaches involved in the renovation process,” she said.
Still, Ms. Kalish said that in hot markets like South Florida or the Hamptons, renovations may not be necessary. “There’s no inventory, so there are bidding wars on available homes, whether they need work or not,” she said.
While most ultraluxury buyers will renovate after they purchase a property, even these top-end homes can benefit from a makeover before they go on the market. Late last year, Senada Adzem, executive director of luxury sales at Douglas Elliman, listed a seven-bedroom waterfront home in Royal Palm Yacht & Country Club, in Boca Raton, Fla., for $13.5 million. It received a few offers too far below the listing price. So, on Ms. Adzem’s recommendation, the owner took the house off the market and spent $300,000 over 60 days to install new white porcelain countertops in the kitchen, repaint the interior, update the primary bath and home office, and install new LED lighting. The work transformed the home from Old World Mediterranean to the transitional style that luxury buyers prefer today. After re-listing the home, it sold within 30 days for close to the listing price.
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What To Consider Before You Renovate
Update things that pay you back: While doing a quick kitchen or bath remodel might be tempting, you probably won’t see a return on investment when you sell. According to Remodeling Magazine’s 2021 Cost vs. Value Report, projects that improve a home’s curb appeal provide the most return on investment for sellers. A garage-door replacement, with an average cost of $3,907, for example, recouped 94% of the cost at sale, according to the report, while the installation of manufactured stone veneer on the exterior returned 92%. A minor kitchen remodel, on the other hand, generated a 72% return. “The exterior curb appeal has a strong psychological effect on people, setting buyers’ expectations as they walk through the door,” said Clayton DeKorne, Remodeling’s chief editor. “If they start out with a strong first impression, they’re in a better frame of mind to pay a higher price.”
Get a home inspection: The buyer will hire an inspector as part of the due diligence process once the house goes under contract. But sellers can benefit by getting their own inspection up front. “Know your property and the condition of the mechanicals, and make sure it’s all in good working order,” said Mr. Dotoli, of Compass. That way, he said, buyers can focus on the presentation of the house instead of little things that are out of line.
Let your broker pay: Some brokerages will front the cost of updates so you can get your home up to speed without any out-of-pocket expense. These brokerages get reimbursed when the house sells with no interest or other fees. Compass provides this service through its Concierge program. Redfin and Coldwell Banker have similar programs. Another option is to sell directly to an iBuyer like Opendoor or Offerpad, which will make you an offer and allow you to sell quickly and easily. Zillow Offers, another iBuyer, is now active in 25 markets and will purchase your home and then resell it after doing minor updates and repairs to make it clean, safe and functional. “Explore every option,” said Jordyn Lee, a Zillow spokeswoman. “Everyone is in a unique circumstance. Maybe selling traditionally does work for you, but if you don’t know what the iBuyer offer is, it’s hard to compare.”