Are Home Updates a Moneypit?

Posted on Wednesday, June 20th, 2012 at 12:30pm.

Post #2 in our Myths of Real Estate Series. By Andrew Hill [caption id="attachment_428" align="alignleft" width="300" caption="Home for Sale"]Home for Sale[/caption] This is a trickier myth and must be handled delicately. The myth here lies in the usage of extreme cases. Yes it is true that if you have a gently used and recently built home for sale that you should not spend thousands of dollars to make minor cosmetic fixes. It’s also true that if you have a home that is forty years old and the appliances have never been updated then you’ll definitely need to invest in your home’s appearance if you want to sell it. Therefore, the key to debunking this real estate myth is striking that fine line between spending too much and not investing enough. Before we find this not-so-mythical line, there’s an important part of real estate that all sellers need to understand. Remember that old saying “Don’t judge a book by its cover?” Modern shoppers no longer adhere to this old adage and its up to you to pick up the slack. With nearly 95% of all home searches beginning with an online search, first impressions are more important than ever before and it is likely this trend will only continue. Okay, okay, so what does all of this mean to you? It means those pictures that you and your Realtor are snapping and posting online, those far away shots that you hope will show the size of your home but not the outdated washer or the dirty carpet, etc. – they matter. They actually matter quite a bit, because nearly every shopper will visit your home from their computer screen before they step foot inside your home. And we all have had the experience of clicking on a website only to click the ‘back’ button immediately afterward. If your home doesn’t scream, “I’m updated and clean” then your potential buyer just left the building. Now that we have established the importance of a freshly staged home, we have to determine how much is the right amount to spend on updates. For this, there is not a set answer, which is probably why the myth came into being. It has to be handled on a case-by-case basis. Fortunately there are a few parameters you can use to gauge how much you need to invest.
  • Age of your home-The relative age of your home will determine how much money you need to invest. For homes that are 30 years or older, you need to consider updating major appliances, while homes that are less than 10 years old may only need some minor fixture updates.
  • State of Appliances-Do you have mismatched fixtures? Is your carpet worn? Does your home smell less fresh than it once did? These are all good indicators of needed updates. While some of these can be fairly costly, carpet replacement for example, they can also be the very factor that is keeping your home from selling.
  • Selling price-Simply put, the higher you price your home, the more costly the updates will need to be. Some buyers will overlook minor deficiencies out of appreciation for a good deal, but 9 times out of 10, we believe you should take the plunge and invest a little more.
In the end, the best way to determine if you are investing enough can be estimated in this simple formula. Take your home’s value, subtract your asking price and the remainder is roughly what you should spend on updates. Although not a perfect formula, it’s great for giving you an idea of where to start. And there you have it. Another myth explained and hopefully you’ll walk away a bit more knowledgeable. If you’re looking to sell your home, there are plenty of other tips and tricks to know that Reilly Realtors will be happy to share with you. No matter what stage you are at in the real estate process, we’re ready to help. Contact us today for help with all of your Austin real estate needs.

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