Every day you look at your house and wonder how it could be better. You often think, “Wouldn’t it be nice if we could (fill in the blank with a home improvement project)?” Before you put your home on the market, give some serious consideration to moving forward with improving your home in a way (or ways) that you’ve been day dreaming about.
Of course, your budget will dictate how much you can invest in your home at this point in time. There is a big cost difference between making minor and inexpensive “polishes” and “touch-ups” to your house, such as putting new knobs on cabinets and a fresh coat of neutral paint in the living room, and doing extensive and costly renovations, like installing a new kitchen.
Major home improvements can be costly but also will garner welcome attention from visitors. There are two main categories:
A. Projects that expand the square footage of your home (e.g., put an addition on your home).
B. Projects that modernize significant elements of your home (e.g., replace your old windows and/or your roof, replace rotting soffits and fascia with durable siding).
If you are in a strong financial position, and can put off your home sale for a bit, consider major improvements, especially if your neighborhood is flooded with homes that are a step above yours. You might just close the gap on neighbors’ homes that are currently worth more than yours and, as a side benefit, if you have trouble selling or change your mind, you get to enjoy your improved home.
If major repairs are not needed or beyond your budget, at least spend time and make the minimal investment to fix what’s currently broken. Short of an offer on the spot, the best possible outcome of a home showing is a buyer who is intrigued, whose reaction is “Wow, this is nice,” not, “Umm, you can tell that they don’t really care that much about this place.”
Be selective about what repairs or upgrades you invest in, though. While your lights all need to be working and your bathtub needs to drain properly, you will not recoup the entire cost of repairing or replacing the basic elements of a house: the foundation, roof, heating, cooling, plumbing and electricity.
It can be tricky to decide between needed, basic investments in your home and major repairs. There’s not a straightforward guide to which route, in all likelihood, will move your home more quickly or for a higher price. The key is to make obvious repairs that turn most buyers off if left alone, and major investments that are needed to “keep up with the Jones’s” in your neighborhood.
Looking for help making repair and improvement decisions? Invite a few relatives or friends in to help evaluate the state of your home. Their perspective could be invaluable. And be sure to keep a running list and records of all repairs you make in preparation to sell. Consult with your financial advisor about the possibility of using these expenses to adjust the cost basis and capital gains from selling the house.
