Making the Right Choices Will Pay Dividends When it is Time to Sell!
Many of you have owned your home for many years and are wondering what improvements will bring the best return on investment and which upgrades could be moved to the bottom of your ‘to do’ list. We are all changing constantly and so is your home! When we see familiar faces often, we don’t really notice the gradual change produced by normal aging. Go to a reunion and your high school sweetheart will look significantly different! It is the same with your home. You don’t notice the daily wear and tear and deterioration when walking in and out each day for 30 plus years. Eventually that ‘new roof’ is showing signs of blistering and is ready for replacement. So often I will ask a seller how old their furnace, roof or water heater is at this time. One spouse may say 5 years and the other 20 years! Our time frame becomes blurred as we age and that is natural and normal.
When we sense we are getting closer to the time where we may say goodbye to our best friend, our home, we begin to take a critical look and become more honest with ourselves as to what may need replacing or repair. Time to look for our folder of upgrades to find out the ages of the important critical components; roof, furnace, air conditioning, plumbing and electrical system. Then on to windows, flooring, paint, siding and other cosmetic upgrades needed. We begin to realize that it may be time to spend some of our hard-earned savings and bring our ‘best friend’ into the 21st century!
Today’s millennial buyers are so much different than you were when you bought your first home. Their tastes have changed and so have yours. Flowered wall paper, pink ceramic tile, and wool carpeting were the rage in 1960, but today’s young buyers are loving hard wood flooring, no wall paper, and colors you would find odd or maybe unappealing. The question is what improvements offer the best return on investment and which upgrades should you leave for the next buyer.
My 35 plus years of experience has taught me never to say never and what is today will probably be the opposite sometime in the future. Change is constant and so are the buyer’s expectations when look for their new home. Today’s buyers are coming into the market in many cases with school loans and little cash for down payment. Incomes are significant so with interest rates still at historic lows, they can pay more for a home that already has updates such as newer roof and furnace. For every $50,000 the buyer mortgages, the payment is roughly $250 per month (based on a 30 year fixed rate at about 4%). Think of what improvements a buyer can purchase by offering more for a home with that improvement already done. The millennial buyer does NOT want to walk into a basement repair, a bad septic system or a furnace on its last leg. These are examples of large ticket items which if in need of replacement will turn away a buyer or if they do make an offer it will be way below market value. The drop in price will far exceed what the repair would have cost.
Conversely, new windows can cost up to $20,000 which will be a great selling point. However, can you imagine what cosmetic improvements you could make for that same dollar amount? I’ve seen many sellers spend money on the windows, but then overlook the cosmetic updates needed such as flooring, painting, kitchen and bath remodeling, etc. How will your home look to a younger buyer? Remember, this may be their first home and feelings, smells and cosmetics are huge. There are companies now that will stage your home when it is time to sell because professionals know the value of cosmetic upgrades and positioning of furniture, pictures, flooring and paint. Please don’t misunderstand, new windows are well worth the rate on return, but if your budget is limited and you are working with a set amount, spend the dollars wisely and think about the time when you are ready to sell. Keep that young buyer in mind when making choices of paint colors, type and color of flooring, and kitchen and bath upgrades. When considering color selections, you can always go online and check the most popular choices of young homebuyers.
Four midrange improvements that are cost effective (Excluding major defects repair and replacement)
1) Garage Door and front door replacement
2) Minor kitchen remodel (no more than $20,000)
3) Bath remodel (no more than $7,000 per bath)
4) Flooring and paint where needed
All too often we wait until the last minute and put in repairs and upgrades to help sell our homes. Wouldn’t it make more sense to do those repairs and upgrades now so that you can walk into new smells, feelings and colors. This also gives you a chance to take time and get the best value. Look for sales and research today’s young buyer preferences and choose those colors and upgrades that also appeal to you. The most important point I want to make is take care of any major defects now. Don’t wait to repair your basement, install a new roof or upgrade the 60amp electrical service. Take care of those items asap as the cost will only go up and the condition will get worse, costing even more in the end.
Treat your old friend, your home, with the same loving care as you would for yourself. Thankfully home repairs are significantly cheaper than medical care! The money you spend now will pay off later and by doing it now you get to enjoy your old friend’s new look while spending those years to come in happiness and comfort.