At the beginning of the year, I wrote a blog about how investing a little money into your home prior to listing would go a long way with attracting buyers and selling it more quickly. Today, I thought I would drive that point home again with some examples of how some of my other clients have benefited from doing the same thing. These are a bit more extreme than the last one, but it should be pretty apparent why the benefit outweighed the cost.
This first example is probably the most extreme case of all. In May 2011, I listed a little 5BR/3BA 2300SF starter home in Laveen on an oversized pie-shaped lot. It had been neglected, but was a good little house in a decent neighborhood:
Yes… it was definitely rough around the edges, but after a good cleaning, some maintenance and some repairs, here’s what it became:
My client invested $5,750 in repainting the entire interior, replacing or fixing broken doors, repairing drywall & replacing missing light fixtures and the broken doorbell they spent another $4,611 on replacing all of the flooring for a total investment of $10,361.
The result? I sold it in 7 days for 2% over asking price. What a transformation!
Another home I sold was a little 3BR/2BA starter home in N. Phoenix in the Deer Valley area. It too suffered from neglect and was definitely run down:
My client spent $3,043 on paint, fixing rotting fascia trim boards, patching drywall and fixing broken drawer fronts. They also spent $1,100 on new carpet for a total of $4,143.
Here’s the finished result:
How did they do? After about 3 weeks, the seller received multiple offers (3 to be exact!) and settled with a buyer just 3.5% under asking price.
This next home is one of my favorite transformations. It was a cute 3BR/2BA single-level home in the ever-popular McDowell Mountain Ranch in Scottsdale. This home wasn’t in terrible shape when I got it, but it was a little “loud”:
My seller spent $3,644 on painting cabinets and neutralizing really bright wall colors, repairing a roof leak and fixing broken/missing cabinet doors. Another $965 went into fresh new stainless steel appliances. They then spent $1,395 on replacing worn & dirty carpets and finally they spent $858, preemptively to treat for termites for a total of: $6,862. Here’s what it looked like:
The result? The seller was also very excited about the transformation of the property and ultimately priced the home higher than I recommended. Right before the 60 day mark and after 2 price reductions an offer came in. It took another 3 weeks and 1 more major price reduction to get the home under contract.
It’s important to note that sales volume dropped off heavily between mid-2010 and Q1 2011, the median sale price dipped to the bottom of the trough for the housing bust and days on market shot up right around the time that we got our offer. The coincidence of timing was very unfortunate for the seller, which is yet one more reason pricing a home correctly the first time can be the difference between a quick sale close to asking and chasing down the market to take more time and net the same or less money.
Hopefully you can see the benefit of investing money into some homes can ultimately benefit the seller. A careful analysis to determine 1) the likely buyer for the home, 2) what features would make the home more desirable to buyers and 3) how much it would cost to make the improvements should always happen first if your goal is to make improvements that would directly benefit selling the home. Some improvements that are specific only to the homeowners’ needs do not always benefit a seller.
I’ve spent a lot of time doing this type of analysis with institutional clients, investors and homeowners and with great results. Please call or email me to find out whether this is the right move for you! For me, this is the fun part of what I do and I would love the opportunity to help you too!
1/18/15 update: I sold a Chandler property in October in which my client made a $4K investment toward new paint, granite counters, carpeting, hardware, staging and a new HVAC component (necessity, choice on this one). These improvements yielded about a $12K bump in value from the pre-renovation value and a solid contract after 23 days, even in a slow market. I’m currently helping another client plan a modest kitchen update of roughly $14K in her mostly remodeled home that if the comps keep improving as they have been, should yield an increased value of about $20-30K from the pre-renovation value. I’ll post these other properties before/after pics and results one day soon! Pre-listing renovations work!!