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If you’re struggling to decide between renovating your home before listing it on the market and saving yourself the effort by selling it as is, consider the cost of the renovation projects you’d want to do and compare them to the return you’re likely to get when you sell.
A 2018 report from Remodeling Magazine shows us that the average cost of the top 20 renovations sellers make have a recapture rate of less than 80%, meaning you’ll only get 80 cents back for every dollar you spend. So in most cases, a renovation doesn’t make sense for your bottom line.
“This year, the most expensive projects didn’t have much of a gain,” Craig Webb, editor of Remodeling and manager of the report, said back in 2018. “I think it’s because real estate professionals think we’re getting close to a peak in market prices. So consequently, spending a lot of money does not automatically mean your house will just ride the escalator up and be worth a lot more.”
Now, there are some exceptions to that trend: If you like to trade or buy your materials from a warehouse at a discount and you plan to do the labor yourself, you can certainly make a profit when you sell. Similarly, if you’re an investor who buys homes at steep discounts and has crews to do the remodel for cheap rates, you can also make your money back. However, the average homeowner who hires contractors to take care of the renovations and repairs typically doesn’t make a lot of money back.
That said, there are four things you can do to your home that will get you your money back in multiples: installing new flooring, adding new paint, deep cleaning, and decluttering.
One common objection I hear, using carpet replacement as an example, is, “What if I replace the carpet before I sell the home, but the buyer ends up just tearing it out after they buy it?”
Yes, but they bought the home and that’s the key! Why take a $20,000 discount on a home for $7,000 worth of carpet?
For some people, though, renovating isn’t an option at all, and they have to sell it as is. In that situation, you just need to price the home accordingly so it will sell. You could also consider offering a discount to potential buyers to offset your lack of renovations—you can read more on that here.
If you have any questions about selling your home or the pros and cons of certain renovations you’re considering, please call me on my cell phone 602-738-9943 I’d love to hear from you.
