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There are three schools of thought on this topic. One is to do nothing, cross your fingers, and see what you get. In areas where the real estate market is hot, many home sellers opt for this solution, because they think buyers are so desperate that they’ll make an offer anyway. And while you may get an offer, you’ll definitely leave a lot of money on the table in the process.

The second school is to recognize that some items need to be replaced or repaired, and offer buyers a credit for those items as part of the deal. You’ve saved yourself the work, but not the money. This option can actually be worse than the first one, because you don’t know how much you would have gotten without offering the credit. Again, you’ll eventually get an offer, but you’re missing out on getting the best price for your house.

If getting the best price for your house is important to you, the only option is to take care of repairs and do the work to make your house shine (or have it done for you). Here’s why: When you sell your home with obvious repairs left undone or a credit as part of the offer, you’re sending a message to buyers that your home has not been well maintained. Now this may or may not be true, but that’s the message that’s sent. And that will drag down the value of your home to those making an offer.

If you go to the effort to make the fixes yourself, you send the message that your home is well maintained. And (this is big) you also upgrade the value of those items you just replaced because they’re new…New carpet, New roof, New hot water heater… “New” has a value to buyers—that’s why new homes cost more than resale.

Putting your own sweat equity into repairs, taking advantage of zero percent financing at the big box home improvement stores, and utilizing a handyman for certain repairs will help keep your costs in check. Be smart about how you make repairs, and be careful not to over-improve. Your efforts could result in getting thousands more for your home. Compare your time against the reward and you’ll see it’s time well spent.

Comments

( 18 comments — Leave a comment )
inked2x
Feb. 17th, 2006 09:24 pm (UTC)
My advice ... shovel out ... stick out the "For Sale" sign ... and sell!! (But what do I know...)
magicmarmot
Feb. 17th, 2006 09:27 pm (UTC)
I'm composing a rather lengthy post about that very topic. It's a booty amount of research (and I gots de big booty) looking at what to fix before selling to maximize the sale value. Some of it is common sense, but some of it has been a surprise.
molasses
Feb. 17th, 2006 09:35 pm (UTC)
ignusfaatus
Feb. 17th, 2006 09:36 pm (UTC)
well. I get your point of view about the new stuff. Here my POV;
new is new. especially any tags or manuals you can dig up and put in a folder. I dont think an unfinished project is gonna make a new water boiler less new.
People are a lttle dumb when they want a house. They arent going to look at a credit and realize that it is not enough to finish the work. They are going to look at a credit and think they are being handed money.
bohemianrapsody
Feb. 17th, 2006 09:47 pm (UTC)
I'm no expert on this subject, but being in the market as a first time buyer, it's really nice to walk through a nice shiny house with a clean Truth in Housing list. This rarely happens though. EVERY older home we looked at has problems - be it electrial, lead pipes, etc..
How much work is needed in your home? Some people (like my fiance) would LOVE to purchase a home in a prime area that needs some TLC. Just *how much* TLC makes a huge difference. (However, the homes that need TLC are usually in crappy areas) Not everyone is a handyman. Are you in a hurry to sell? Have you checked out zillow.com? You can get a nice idea of other homes appraisals in your area.
magicmarmot
Feb. 17th, 2006 10:10 pm (UTC)
Appraisal based on other homes in the area comes in at over $300,000. That doesn't take into account the condition of the home. I have updated electrical, plumbing, and a brand new boiler. The only old plumbing is in the wet wall in the bathrooms, everything else is new copper.

The needs are a new front porch and the associated siding on the front, a stainless steel chimney liner, and railings on the front porch steps. Of those, the chimney liner is the one that makes me all wibbly because it means scaffolding and ladders and I'm not built for that kind of thing.

The roof is probably gonna need new shingles within the next three years. That's another not-for-me project, though if I decide to keep the house I may bump up the second story to a full-height one.
bohemianrapsody
Feb. 17th, 2006 10:47 pm (UTC)
I can only imagine how much the value went up since you originally purchsed it. It goes without saying of course make $ regardless.

If decide to do those repairs, keep in mind Scott is a roofer. He's a pro with a ladder.
magicmarmot
Feb. 17th, 2006 10:54 pm (UTC)
Does he freelance?
bohemianrapsody
Feb. 18th, 2006 04:00 pm (UTC)
Sure. If you ever want to meet him for a consultation, just email me.
stark0228
Feb. 17th, 2006 09:37 pm (UTC)
Just remember that your time is worth something. If spending $500 gets you $1000 in increased sale price, but it takes you a month of nights and weekends, is it worth it?
magicmarmot
Feb. 17th, 2006 10:02 pm (UTC)
It might if I like doing the work anyway.

But if I spend $5000 in materials on the front porch and it increases the sale value of the house by $50,000, is it worth it? I say hell yes.
lexinatrix
Feb. 17th, 2006 10:17 pm (UTC)
Yah, but calculating some opportunity cost along with that doesn't hurt. Even if you bill your time on the cheap, you may be surprised.

Take, for example, my motorcycle project. I bought the bike for $2k. I put another $2k+ (and as-yet-uncalculated hours over several months) into making it the best goddamned 1990 Ninja on the planet. I come to find that I could have waited 1 year, spent $4k more and had a brand-new bike with 2006 technology, in a silver paint job (which hasn't been seen on a stock bike in 15 years).

Was it worth it to save $4k? Uh, I don't know. On the one hand, I learned a crap-ton of information about rebuilding motorcycles. On the other I could have spent that time doing... something else and just forked over the cash for a new bike with absolutely zero problems. Right now the "OMG you idiot!" hand is slapping me around a lot.
ignusfaatus
Feb. 17th, 2006 10:40 pm (UTC)
ha ha! I can feel that. I have an ebay volvo that did me like just like that.

you dont have a bike recommendation for a short girl do you?
magicmarmot
Feb. 17th, 2006 10:52 pm (UTC)
Oooh! Ooooh!


a mini-bike.


Thank you, I'll be here all night.
lexinatrix
Feb. 17th, 2006 10:54 pm (UTC)
Buy one of mine? =) How short are we talking? I'm 5'3" myself. What kind of motorcyle are you looking for? Cruiser, sportbike? Daily commuter? Long-haul roadtripper?
magicmarmot
Feb. 17th, 2006 10:51 pm (UTC)
Well, if I consider the equivalent opportunity cost, it would probably be closest to assume that I'd be spending time working on a new place, either building it or modifying it to my needs.

I have spent a chunk of time in the past week or so researching options from finding an old warehouse or factory to looking at single-family homes with really big-ass garages to looking at land/lots that I could build on.

If I was willing to move at least an hour's drive away (Like let's say Owatonna), I could do it. I could even find residential lots of over a half-acre in the relatively metro area in the $200-250k range, and in one case I found a ten-acre parcel in a pretty decent location (Minnetrista) that was under $300k.

It seems unlikely that I'll be finding something to fit my budget in the really near future.
lexinatrix
Feb. 17th, 2006 10:57 pm (UTC)
Okay, so then I guess you're trying to determine if you should mod the house to suit your (interim) needs and stick it out, or patch it up and sell it off?

Besides the usual recommendations of bathroom and kitchen upgrades, I don't have much info on what gets you the most bang-for-your-buck.
magicmarmot
Feb. 17th, 2006 11:17 pm (UTC)
Fixing to sell, they actually recommend not remodeling kitchen and bathrooms because the ROI is slight (unless you do the work yourself). Exterior stuff leads the list, followed by painting and detailing the interior, new floor coverings, etc. Mechanicals (plumbing, heating, etc.) are at the bottom of the list.

Critical repairs (like a leaky roof) are necessary to disclose.
( 18 comments — Leave a comment )

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