By Chad Taylor
Question: Is it worth updating my home before I sell it? What will I get out of it?
With the spring market quickly approaching, we are already doing some business planning with clients who are ready to take advantage of the limited inventory. Less competition equals fewer days on market and a higher net. That is a fun combination!
However, even with low inventory our market is still a “price war AND a beauty contest!” Buyer’s today are very educated (meaning they are online watching prices and new listings daily) and are still looking for a good deal. When I say that most sellers cringe a little. So let me be clear: List price can be a “good deal.” Great listing agents know the value of pricing in-line with market value or sometimes slightly below. Therefore, full list price can meet the buyer’s criteria of being a “good deal.”
Okay, so we have touched on pricing. Now let’s talk about the beauty contest. A good rule of thumb is that updating your home is always a good idea. Today’s HGTV generation has high expectations when it comes to condition. That said, there is a difference between painting and staging a home for sale and remodeling a bathroom. Both could be considered updating, yet both will have a different return on investment. We see our clients investing (not spending) 0.5 to 1 percent of their list price on staging and conditioning on average.
This includes, but is not limited to: painting, new light fixtures, replacing cabinet hardware, etc… You get the picture. In these cases, the sellers typically get their money back by achieving a higher sales price. Statistically, 89 percent of homes in average to poor condition receive offers much lower than list price. Conversely, 93 percent of homes in above average to excellent condition receive offers very close to list price. Knowing these stats, most sellers choose to improve the overall condition of their home.
“So, what about major improvements like the bathroom remodel?” you might ask. Major improvements will almost always help a home sell more quickly and for more money. However, when it comes to return on investment, in the KC market a major bathroom remodel will only get you back approximately 55 percent of your cost. So the conversation becomes, “Do we remodel the bathroom to help us sell more quickly, or do we price accordingly to overcome the potential objection to an older bath?” If you are going to live in the home for another year before selling, the remodel may be worth it. If you are selling in three months, strategic pricing may be your answer.
Email me today if you are considering a major project and would like more information about the average ROI in Kansas City for certain upgrades.
This weekly sponsored column is written by Chad Taylor of the Taylor-Made Team and Keller Williams Realty Key Partners, LLC. The Taylor-Made Team consistently performs in the top 3 percent of Realtors in the Heartland MLS. Please submit follow-up questions in the comments section or via email. You can find out more about the Taylor-Made Team on its website. And always feel free to call at 913-825-7540.