Published 24 September 2022
While buyers are still willing to pay full price, or more, for properties that are clean, fresh and ready to go, a large percentage of buyers shy away from homes that require clean-up or repairs after the purchase. The key to moving a home from the less-than-desirable to the desirable category has everything to do with condition.
While sellers of new and existing homes can add value to their listings by offering incentives, such as paying loan and closing costs, etc., owners of existing properties have an additional tool at their disposal: The fix-up. Fixing up before sale is certainly a good idea, but the rationale behind dipping into the elbow grease dispenser goes much further.
Ideally, the end result of a fix-up is to remove any and all of the reasons a buyer cites as an excuse to reduce your asking price or reject your home completely. Well, that sounds simple enough, but how can a seller accurately identify the physical shortcomings that need to be addressed with his or her particular property?
The most comprehensive and effective way to understand which repairs will benefit a seller in the long run is through the collection of market sales data. The first step is to study the sales prices, days on the market and physical descriptions of all recent comparable sales. Comparable sales are those that match most closely the age, size, location and physical condition of your property.
The data is updated daily and easily obtained from your local Realtor. The amount of sales data required often differs, depending on the individual characteristics of the property. When enough information is compiled, an accurate picture of what Las Cruces buyers are willing to pay for properties like yours will begin to materialize.
Next, identify the top and bottom ends of the range. The homes that sold at the highest end of the range most likely offered greater value and more amenities than competing homes and were probably described using adjectives such as “sparkling” or “beautiful.” Homes at the bottom of the range wouldn’t have necessarily been fixer-uppers but were more likely average in nature with no particular value-added features. Advertisements for homes such as the latter usually describe amenities that exist around the property (i.e., “close to schools and shopping”), rather than touting amenities specific to the property itself.
The third and, according to some, most difficult part of the exercise is to objectively and accurately determine where on the pricing scale your property fits. If the condition of your property is the same as the condition of the homes at the top of the scale, you need only worry about the marketing (to get buyers to the property) and the staging (to allow buyers to experience the home at its best). If you find yourself at the middle or bottom of the scale, you can still achieve a higher selling price, but you must make sure that your price and condition “match.”
Buyers are anxious to purchase clean and sharp properties and often pay full price when a home’s price and condition match exactly. If a price/condition gap does exist, it can be easily closed by lowering the price, raising the home’s condition, or by employing some combination of the two. Because each property and marketplace is unique, there isn’t one specific fix-up rule that can be effectively applied to all situations. Some homes can get by with a bit of landscape work and some touch-up paint, while others may need thousands of dollars invested in carpet, paint, roof repairs, etc., before the condition of the property will match the price the seller would like to achieve.
If your property’s condition doesn’t quite reach the top of the scale, you can easily determine whether it’s worth your while to try a higher selling price by comparing the price that your property would bring in its present condition with the prices buyers are paying for like-properties in top condition. For example, if your property would bring $200,000 in its present condition and $220,000 with improvements, you may choose to improve the property in order to snare the additional $20,000.
Improving may not be a good idea, however, if the cost of the improvements exceeds approximately 33 to 50 percent of the dollar value of the price/condition gap. In the above scenario, it might be worth the seller’s while to fix up the property if the cost to do so didn’t exceed around $6,600 to $10,000. A good rule of thumb is to try to achieve a $2 or $3 return for every fix-up dollar spent. In markets where buyers are scarce, sellers may not realize any additional return on the cost of their fix-up. They may, however, attract a buyer that says “Heck, since the houses are all priced about the same, let’s buy the one that’s already fixed up.”
When it comes to the interior of your home, don’t forget to lose the clutter. Remove excess furniture, clear the walkways, and make a clean slate of horizontal surfaces. Homebuyers react more favorably to homes that feel light and bright, so ask a professional to stage your home to enhance the amount of available light and space it has to offer.
And ditch the provocative pictures of Uncle Harry that were taken during his graduation from clown school. Homebuyers will have an easier time picturing themselves living in your home if their image doesn’t include mug shots of your relatives.
See you at closing!
Gary Sandler is a full-time Realtor and president of Gary Sandler Inc., Realtors in Las Cruces. He loves to answer questions and can be reached at 575-642-2292 or Gary@GarySandler.com.