In some cases, buyers simply can’t imagine what the home would look like after the renovations are made.
Sellers try to rationalize not making needed updating and repairs to their homes before marketing them by saying they are going to let the buyers make their own personal choices. It is a convenient story to justify not going to the effort for the necessary market preparation to justify achieving the highest possible sales price.
An agent told a story of a home that was structurally sound being on the market, but it needed significant cosmetic work, like paint, floorcovering, updated fixtures, and lots of yard work. The house was vacant with the owner having moved out of town.
The agent explained to a prospective buyer what he thought it would take to bring the home up-to-date and what it would be worth. The buyer was from out of town and was going to be teaching at the university the next semester. He returned home without buying and came back to look again two months later.
As they were looking at homes with the same agent, the question came up about the previously viewed home that needed work. The agent told him that she had bought it and did all the things that she had suggested. The buyer asked if he could look at it. On seeing the property, now, in its pristine condition, the buyer asked the agent if she would sell the home to him at a profit.
The agent told him that it wasn’t for sale but followed up with the buyer with a question of her own. “I told you that you could buy it for below market and gave you an estimate of what it would take to update it which would have you in the home below market value and with all the colors and choices of your own. Why didn’t you buy it then?
The buyer admitted that it looked like a lot of work and that he just didn’t feel up to the challenge. The main thing was that he just saw a lot of work and couldn’t really see the finished product.
This story is not novel; it happens frequently. Buyers are not experienced enough to recognize what needs to be done, how much it would cost and how long it would take. In many cases, they don’t have connections with the different service providers. In some cases, they simply can’t imagine what the home would look like after the renovations are made.
There are some buyers who scout out opportunities for do-it-yourself experiences where they can earn sweat equity by buying below market and making the repairs to add value to the home. There are many more buyers who don’t know how and/or may not want the hassle and are willing to pay a higher price and be able to “move-in” to their new home.
The highest prices being paid for homes are the ones in the best condition with the best locations.
The highly popular TV series Fixer Upper now, on the new Magnolia Network, uses this situation for the premise of each show. People want to buy a home in great condition but can’t find what they want. Chip and Joanna find a good home in a good neighborhood for them and sell the vision of what it could be. The unique aspect of the show is that they act as agents, designers, and contractors to meet the buyers’ budget.
In the case of Fixer Upper, the buyer is the beneficiary of the increased equity for having taken the risk to make the repairs. For the seller to be the beneficiary, they need to do the updating and repairs before marketing the home.
Ask your agent if they can provide suggestions of what items would most benefit from remodeling and if they have service providers that they can recommend. The proceeds from the sale of your home belong to you and to maximize them, it needs to sell for the highest possible price.
McKee Smith, REALTOR®, has been helping people like you sell and buy homes in the DFW area for many years. He is very knowledgeable about the housing market in Dallas and Fort Worth. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified. Remember – McKee has the keys to selling your home!