Improving Your Home Can Result in Greater Rewards
Putting money into home improvements is paying higher dividends for many homeowners today than in years past. Well kept up to date homes are very appealing to buyers for more reasons than you might think.
There are countless articles on how homeowners can improve their homes to make them more appealing to prospective buyers. When I meet with home sellers, a regular part of the conversation involves discussing ways to improve the property. Most believe that making the house more appealing will exact a better price. In many cases, this is true, but at what cost? Getting a better price on a home does not always equal more dollars in the seller's pocket. Before traveling down the home improvement road to make more money on your home, there are things to consider.
If It's Broken Fix It
No one likes a broken house unless, of course, you are giving it away. My first rule is to consider fixing anything that is worn out, faulty, or just out of order. Replace worn-out carpet and paint. Don't use the excuse that someone will come in and change things to meet their style, so why should I do it.
Consider this: Many of today's home buyers, especially the millennials, have limited funds to purchase a home. They use the FHA loan program to put down 3.5% and ask the seller for closing cost assistance up to 6%. In Berks County alone, over 40% of all home sales have some degree of seller credit to the buyer as part of the deal. If the buyer is using a loan program to put down limited funds and asking the seller for closing cost assistance, do you think they have money to make improvements after settlement, likely not!
If Economics Allow, Improve It
When I meet with a seller, one of the first things is to evaluate the neighborhood and surrounding area. You do not want to over-improve your home beyond what the location can handle. I also consider the price range of the property. Here in Berks, the goldilocks zone for home pricing is under $350,000. The percentage of homes that sell in Berks over $351,000 is approximately 6.4% leaving a whopping 93.6% that sells under that figure. If you put money into a $325,000 home to make it a $400,000 value, you could run into some economic pricing pressure.
The lesson is that many of today's home buyers like to purchase the "Complete Package" because they can simply put a mortgage on it and make a payment. More house now and less work and expense later all wrapped in a single mortgage payment.
Almost everyone loves a smartly styled, well-kept home. The instant gratitude afforded by a turn-key property is very appealing to today's home shopper. They are often willing to pay more for the ease of obtaining a mortgage payment and continuing living their life unobstructed with duties like remodeling a home and taking out additional loans to do so.
In my opinion, homeowners are more likely to see a higher return on the investment in home improvements due to the economic conditions surrounding the spending habits of today's home purchaser.
Knowledge is Power!
Jeffrey C. Hogue