Selling Smoothly Through Home Improvement
In today's real estate market, sellers no longer have the upper hand. With a flood of existing homes on the market (up 5.9% at the end of February to a near seven-month supply of 3.75 million homes), sellers must be proactive in order to differentiate their homes.
Buyers will probably ignore the many homes with "For Sale" signs on the yard but not efforts made to improve the home's chances of selling (sometimes referred to as “curb appeal”). Here are some characteristics of homes with poor curb appeal:
- An empty, dirty swimming pool in the backyard.
- Roofs in bad need of repair.
- Dirt gardens and dead lawns.
- Paint or siding in need of replacing.
Many homebuyers might be stretching themselves financially to get into a home, so a list of repairs or projects can be major turn-off. Sellers whose homes suffer from the some of the ailments listed above might consider a home improvement loan to help expedite the selling process, and can potentially increase the sale price of a home.
Home Improvement Loans: Plan Your Project
A home improvement loan could be the best answer to help sellers get the asking price they desire, as well as helping to sell the home in the shortest possible time. Although taking out a home improvement loan does reduce available equity, it may be necessary to mitigate deferred maintenance and get the home sold. Without the improvements sellers may be likely to get fewer offers, lower offers, and it will take longer to sell the home. It is critical that sellers have clear home improvement plans, including a well-defined budget with detailed cost breakdowns.
Categories of Home Improvement
There are a few ways to classify home improvement projects, but creating a list will help prioritize what needs to be done and what will return the most on the investment. Sellers will be looking at three basic categories of home improvement:
Homeowners who have lived in their houses for some time probably have extensive lists of repair projects that have been put off. The ugliest of these repairs should be prioritized and moved to the top of the improvement list.
Certain upgrades can help a home sell more quickly. Tthe condition and floor plan of the house are most important. For example, if there are three bedrooms and only one bathroom in a home, an additional bath might be the highest priority. Also, moving from one bedroom to two makes a much larger difference in the overall appeal of a home than going from 4 bedrooms to 5. Kitchen and bathrooms are the often best places to start and will yield the best results, especially if the existing ones are worn or dated. A new countertop or refacing cabinets can update the look of your kitchen and make it stand out.
Curb appeal can often be significantly enhanced at minimal expense. Not everyone can afford an irrigation system, but making sure the lawn is green and healthy can make a big difference. Other flowering shrubs can also go a long way to improve the curb appeal of any home. Additionally, the front door is always focal point of prospective buyers, and ridding it of peeling paint and faulty hardware can offer a much improved first impression.
Home Improvement Loans: Planning Before ApplicationBefore obtaining a home improvement loan, sellers should look past all the "quirks" of their home that they have become accustomed to, and try to see it as a potential buyer would. Then they must determine a realistic amount for the improvement budget and work within it, starting with the most cost-effective options. Most builders are familiar with construction or renovation lending requirements, and can help prioritize proposed improvements. A contractor would most likely put together a description of the materials to be used and a cost breakdown for the lender.
Not a Silver Bullet
Getting a home improvement loan and fixing up a home can go a long way towards improving a seller's chances of beating out the competition for buyers. However, sellers should treat the project logically as they would any other major investment--a carefully considered and executed improvement project should make financial sense and result in increased proceeds when the house sells.
Sources:
Wall Street Journal
