We all love those house-flipping shows by shouting our opinions on what the homeowners should update and weep when we see the final reveal. It’s an innate human instinct to want to make things better. When it comes to selling your own home, it’s often a good instinct to follow.
However, while it may be ok to max out the budget on a reality television show, pulling out all the stops in your own home renovation might not be the best choice. Depending on the real estate market, your neighborhood and what buyers are looking for, you may need to do less or more than you think. Before you start knocking down all the walls, take these four considerations into account.
Sellers Market vs. Buyers Market
Does your local market favor buyers or seller? You can tell the difference by talking to a real estate agent or checking out the nearby neighborhoods. If a lot of nice for-sale homes in your area haven’t sold, it’s very likely a buyers market. This means that shoppers have many homes to choose from, so the ones with the nicest updates, lowest prices and better neighborhoods will go first, leaving a lot of homes sitting idle on the market.
If you notice that homes are getting snatched up right and left, then it’s a seller’s market. In this case, there aren’t as many homes for buyers to choose from, so sellers can often get above asking price as a result of bidding wars. If you are thinking about selling your home, understanding what the market is doing will help you determine how much you need to upgrade your home.
Improving in Different Markets
If it’s a buyers market, you’ll likely need to do more to your home to stand out and appeal to more buyers. The average garage door replacement costs around $1,600, but if it makes your home stand out and sell faster, it may be a good move.
If it’s a seller’s market, you can get away with upgrading less since homeowners will be competing for your home regardless of how tricked out it is. Spend your money wisely on things like new counters or fixtures, and spruce up the rest with a fresh coat of paint and some elbow grease. Even if the market isn’t in your favor, you still don’t want to blow your budget on custom upgrades.
Consider Your Neighborhood
The next important factor is your neighborhood because you don’t want to price yourself out of it. Do you live in a new development? Or an older one where the homes are 40, 50, or 60 years old? Do you have a homeowners association that will limit what you can do? Or can you renovate yo your heart’s content?
In olde neighborhoods, you don’t want to renovate your house too much that it looks out of place or becomes a target for theft. You want to find a nice balance. If most homes in your area have dated finishes, focus on a few crucial updates that’ll help your house stand out and stay within your neighborhood’s average pricing. People are less willing to buy a $475,000 house in a neighborhood where homes don’t usually sell for more than $300,000.
A good rule of thumb: Don’t raise your home’s value any higher than 10% of the average cost of homes in your area. However, if you live in a nicer area and your house is the shabbiest on the block, you’ll want to spend a little more to keep up with the other homes in your neighborhood. Take a look at homes in your neighborhood that have sold in the last 90 days. See what sort of finishes those homes have, and try to emulate them as best you can while remaining within your budget.
Where to Invest Your Money
Try to give your home the features buyers are looking for most. A lot of homeowners look for the updated kitchen, master bedrooms, and bathrooms. These three spaces alone can sell your home, so consider investing extra money in these areas. If you have additional funds, consider replacing flooring or upgrading small things, like lighting, fixtures, and doorknobs.
Use your budget wisely, and consider where you may be able to do projects yourself. Some DIY projects can recoup a large part of your investment. If getting brand-new kitchen cabinets is out of your budget, or would price you out of your current neighborhood, consider painting them instead for an updated look and maximum return for minimum effort.
Of course, you’ll also want to keep a lookout for sales or deals on things you can use in your renovations. Regardless of how old or new your neighborhood is, choose timeless styles and colors that will appeal to a wide range of home buyers.
When it comes to renovating your home, make informed decisions based on the current real estate market, your neighborhood and features buyers want most. If you do your research and follow trends, you’ll end up with a beautifully renovated home that will appeal to a large range of buyers.