If you’re considering selling your home “by owner”, you may also be considering spending some money to upgrade or “tidy it up”. Many people will tell you that in order to get a quick sale for top dollar; your home must be in top condition. That may mean upgrading and likely spending some money.
There is some substance this assessment – it only stands to reason that an upgraded home will sell for more money and possibly faster than one that hasn’t been upgraded.
The answer is, “Possibly”.
Assuming that your FSBO home is less than 20 years old, or that along the way you or a previous owner have already replaced old and outdated appliances and fixtures, it probably doesn’t make sense to upgrade right before you sell. Studies indicate that upgrading even the most important areas of the home, the kitchen, bathrooms and master bathroom; may not yield a positive return on your investment. Even in the best of circumstances getting back dollar for dollar can be difficult. Thus, in a home of $200,000, if you spend $15,000 on your kitchen, right before you put your home up for sale, you may only realize a $10,000 to $15,000 increase in selling price. Except for possibly getting a faster sale, it may not make sense.
However, if your FSBO home is truly outdated with appliances from the 1950s (although these are now becoming very popular) and fixtures that are cracked or tarnished, then they will drag the price of your property down significantly. In that case upgrading can make sense. A $15,000 kitchen remodeling, under these circumstances, might yield $20,000 or more in price increase and expedite the home sale.
The one area where upgrading seems to make sense in every case, is where the change is mainly cosmetic, and the price to upgrade is low. In other words, it doesn’t cost a lot, and it improves the appearance of your home to a potential home buyer. This includes, for example, applying a fresh coat of paint (inside or out), or new light fixtures in the bathroom, or even replacing an older countertop with a new one. You could reasonably expect to recoup your money and perhaps even more, simply because you didn’t spend very much, yet you made your home “show” better.
On the other side of the coin, upgrading where it doesn’t show is not usually cost effective. Putting in a more powerful, garage door opener (when the old one still works) doesn’t make a lot of sense, because no one sees it. Similarly, putting in a granite countertop, while giving the kitchen/bath an air of elegance, might cost so much, that it makes it difficult to recoup the money invested. The trick is to be sensible and use your own judgment. It also doesn’t hurt to ask a third party for their honest opinion. Familiarity breeds contempt – you may be perfectly comfortable with something that you have seen hundreds of times but for a prospective buyer, seeing it for the first time, it very well may turn them off your home.
The biggest difficulty, of course, is that it’s hard to put an exact price tag on how much of a drag on price not remodeling will put on your home, or conversely how much of a price increase upgrading will deliver. This is especially so in hot markets where everything that’s put up for sale seems to sell very quickly.
Doing a major upgrade before selling rarely pays dividends. Unless you do a lot of the work yourself and realize savings through “sweat equity”, you’re unlikely to recoup your money. And because you obviously won’t be living there after the sale, you won’t even be able to enjoy it yourself.
Mark Camphaug is currently President of FreeFSBO.com [http://www.FreeFSBO.com] and it’s parent Martcam LLC. www.FreeFSBO.com [http://www.FreeFSBO.com] is a For Sale by Owner (FSBO) website that offers a free online listing and free real estate lawn sign to prospective FSBO home sellers. Camphaug spent the last 6 years as Vice President of one of the world’s largest and most successful Interactive Marketing Agencies where he specialized in all aspects of internet marketing, including SEO, PPC, Email and Affiliate marketing. Prior to that Camphaug spent 12 years in the competitive new home industry, duties included sales, marketing and client relationship management.