Pre-Inspections, Repairs, and Improvements When Selling a Home
If you are planning to sell your home, you should bear in mind that forewarned is forearmed. You will benefit from identifying any problems during a preliminary inspection, instead of waiting for a buyer’s inspector to identify a problem. If the market favors sellers, the buyer may be relatively willing to handle repairs on their own. If the market favors buyers, you may need to put more effort into repairs.
Most buyers will include contingencies in their offer. These include approval of a home inspection conducted by their inspector. Homeowners also need to comply with disclosure requirements in their state. These are additional reasons to investigate potential property defects and address them.
Working with a Home Inspector
You can conduct a basic inspection on your own, but you will need to retain a home inspector if you want to make sure to identify any serious problems. This is not the same inspector who will later inspect the property for the buyer. The inspector will be a contractor, an electrician, or another specialist who would be able to recognize issues that an ordinary person could not. Your real estate agent may be able to advise you on whether you should retain an inspector and provide recommendations. The drawback of hiring an inspector is that it may increase your required disclosures to the buyer if the inspector finds something, but the buyer’s inspector probably will find the issue anyway.
Some inspections will be general, while others will be specialized. You may want to hire a specialized inspector if you already suspect that a certain problem exists, or if the general inspection reveals a problem in a certain area. These inspections are more expensive, however, than hiring a general contractor to do a walkthrough. In many situations, the inspector will provide the homeowner with a report and analysis of which flaws in the property may be concerning to potential buyers.
Most buyers will prefer to buy a home into which they can move without making significant repairs. This means that you should address any obvious issues before showing the house to buyers, which will prevent a negative first impression and a long list of disclosures. You may be able to handle basic repairs on your own if you feel comfortable with them, such as painting, cleaning gutters, changing filters, planting flowers, replacing locks, or fixing faucets. On the other hand, you should not handle repairs that could pose a safety hazard, such as electrical work, or repairs that involve the structural integrity of the home.
It may be more beneficial to offer the buyer a discount than to undertake significant repairs.
If the repair is major, you may prefer not to fix the issue and simply integrate the cost of the repair into the sale price of the home. You can provide the buyer with written estimates of repair costs to explain how you took them into account in calculating the price. If the market favors sellers, buyers likely will be willing to handle many types of repairs.
If you do not want to make any repairs, you have the option to sell your home as is. This may be feasible if investors are buying properties in the area to fix up and rent out or flip to new buyers. An as-is contract does not negate your obligations under your state’s disclosure laws and may significantly reduce your sale price. On the other hand, if you live in an area where many people are selling their homes as-is, you may get an advantage over the competition by handling repairs and making your house as appealing as possible in its sale condition.
Remodeling and Home Improvements
Even if your home does not need repairs, you might consider whether making improvements or updates to it would increase its value. These may be more costly than repairs, so you will want to compare the estimated cost to the estimated increase in your sale price. Some areas in which you might want to consider updates include the kitchens, the bathrooms, the landscaping, and roofs and windows.
Ironically, some “upgrades” may actually reduce your home’s appeal to some buyers. You may feel that a swimming pool would increase your property’s value, for example, but a family may be worried about the hazards posed to children. Custom cabinets in the kitchen or marble floors in the bathroom may seem luxurious to some people and excessive to others. If you want to turn a garage or an outdoor patio into a room, you should be aware that some buyers may prefer the original use for the space. You also may not want to have a house that is far more luxurious than others in your neighborhood, since buyers for that type of house may not want to live in that area.
Upgrading parts of a house can sometimes add resale value, but not all upgrades will be a good return on investment.
Before arranging for upgrades or improvements, you will want to make sure that you have the funds to follow through on the project and that it is cohesive with the rest of the house. Having one set of rooms look much more luxurious than the others can make the rest of the house look worse than it is. Improvements will pay off the most if your home already lies at the high end of the spectrum. Also, upgrades to an older home will matter more than upgrades to a newer home.