Should I Renovate Before I Sell?
Whenever I sit down with a seller, the first question that pops up is this: “How do I maximize the sale and get top dollar?” This question is often followed up with: “Should I renovate before I sell?”
So, should you renovate? And, will this garner a higher price for your house?
There’s no one straightforward answer. But, here’s the general school of thought: the amount you spend on a high quality renovation doesn’t mean you’ll get that same amount back when you sell. Instead, If you want to renovate and enjoy your remodel, go for it. On the other hand, if you are renovating for the sole purpose of making more money when you sell, I recommend picking and choosing your projects carefully.
In my experience, I’ve seen a seller complete a low-end kitchen renovation using tiles and countertops on sale at Home Depot. Although this seller expected to raise the asking price with his “renovated” kitchen, he found out that buyers don’t want to pay extra for a kitchen they don’t like. Instead, buyers take into account how much they’d need to spend to turn the kitchen into a space they love. And, this often factors into how much that buyer is willing to pay.
So, if you’ll only be remodeling to sell, consider smaller and much less expensive changes that can make a big difference.
For example, painting the kitchen cabinets and/or installing a new countertop or backsplash can give your kitchen a fresh new look. And, a bathroom can be transformed simply by changing grout color and installing a new vanity and mirror.
Of course, there are exceptions to every rule. For example, I have come across some scenarios where a larger high-end renovation can actually increase the sales price by more than the cost of the renovation. To illustrate this, I recently met with a client who lives in a large loft space. He was considering adding an additional bedroom in his oversized living space. After running the numbers, it was a no-brainer to move forward with the renovation. The total cost of the renovation would be around $30,000 and would add an additional $50,000 to his selling price. If he decided to rent, he could garner an extra $800 a month in rental income. In addition, the new bedroom would solve the one issue he has with his home as he needed another bedroom. Now he has the option of staying in his home longer - if this is what he wants to do.
What Should You Do?
Generally speaking, you won’t recoup your money on a gut renovation of a bathroom or kitchen, but there are some changes you can make that can have a big impact.
Before you decide to renovate, consider your motivations and talk to an experienced real estate agent who can provide you an estimated value of any renovation you’re considering.