If you put your house on the market a year ago and asked me “should I update my bathroom, invest in a new hot water heater, paint the bedrooms..?” I would have told you that unless there are issues that are glaringly apparent, or if the house has safety issues of any kind, don’t put any money into it because in that market buyers didn’t care – they had nothing to choose from so a paint color, or bathroom that needed updates was not even on their radar.
That market has swiftly changed, (and by the way, I think that is a good thing) and because there is more inventory but mainly because buyers are paying more because of the increase in interest rates, they’re being more cautious . They are more likely to identify certain things that they will invest in or not. They may look at a kitchen or bathroom and not love it but know that they want to make updates someday. They may not like the red walls in the living room but it’s only paint. They are also no longer (thank God) waiving inspections so anything that an inspection would reveal should be addressed.
Although some countertops and finishes are stunning and we may have spent the extra money to include them in a past reno, homeowners will not recoup that extra money that they may have invested in the Cadillac of cabinets or top of the line stone countertops from Brazil.
However, according to the National Association of Realtors most recent report, there are three interior updates that provide the highest return on investment and therefore are worthy of the cost. These are: hardwood-flooring refinish, new wood flooring and an insulation upgrade.
“A big remodeling project, such as a new kitchen or deck, might not be worth the investment and delay a seller’s timeline, given supply and labor shortages, said Jessica Lautz, a vice president at NAR. Focus on more affordable projects that appeal to buyers and look beautiful in photos, such as refinishing hardwood floors,” she said.
“A hardwood-flooring refinish has a 147% cost recovery, meaning homeowners are likely to recoup well more than the cost, said Ms. Lautz. For comparison, a kitchen upgrade has a 67% cost recovery.”
Veronica Dagher “The Repairs That Will Help Sell Your House in a Cooling Market”, WSJ, Oct 10, 2022
Bottom Line
Focus on addressing things that matter the most that will not delay or jeopardize the sale of your home. As I mentioned, if you know that there is an issue that is likely to be revealed in an inspection, start the process of researching what is required, including cost, to make that repair. It is easier to resolve issues ahead of time vs putting your home on the market, staging it, photography, keeping it neat and clean for the duration of time that it is on the market for open house guests to admire, then accepting an offer from an excited buyer who receives their inspection report back that includes the issue that you avoided. You now have to fix the issue, and there is a good chance that you just lost your buyer as well.
Many times, homeowners will hire an inspector before they list their home so that they are aware of the existence of any major issues and get them resolved. This provides you with a level of confidence that there will not be any surprises that could get in the way of a smooth sale!
