Before you start to counsel owners about home improvements, remember these two rules:
First and foremost, never counsel before you are hired. Counseling happens after a client-relationship is established. Attorneys don’t offer legal advice before their services have been officially retained. Doctors don’t diagnose without assurance of compensation. Realtors should follow suit. Wait until the listing agreement is signed. Then begin to give counsel regarding how the owner can realize a quicker sale or higher price by making recommended home improvements and implementing staging advice.
Too frequently, agents give away their expert counsel during listing presentations in hopes of proving their ability and expertise to sellers. More often than not, though, the sellers simply take the counsel with them when they link up with an agent who is less skillful but who promises a cheaper fee.
Second, tell the truth. If the sellers need to clean the home, tell them. If they are smokers and the house reeks from cigarettes, tell them.
I once had to convince some clients to hire professional cleaners to rid their home of the smoke smell that permeated the carpets, walls, and furniture throughout the entire home. Then I made them promise not to light up again for so long as they owned the house. They agreed under protest, but we sold the home, so they were happy. The wrong odor in a home can really lower the odds of a sale.
Likewise, appearances can kill buyer interest. If the home is crowded with too much stuff, say so. If the pink exterior color will cause people to drive right on by, speak up. Holding your tongue will only delay the day of reckoning. What’s more, it’s easier to be totally frank when you first notice the problem, though only after the listing contract is signed. If you counsel before you gain commitment, your advice could offend the sellers and cost you the listing. This is another reason to follow Rule #1 and get a signature before giving counsel.
Improvements that contribute to the sales price When it comes to preparing a home for sale, worthwhile and necessary improvements fall into three categories:
- Improvements that bring a home back to standard.
- Improvements that correct defects
- Improvements that enhance curb appeal or first impressions.
The following sections provide guidelines in each area.
Bringing a home back to standard Before you present a home with horribly dated décor, counsel the sellers to modernize the interior look in order to align it with the expectations of current-market buyers. Sellers don’t have to go overboard; they just need to install a reasonable color scheme and implement enough of an update so that new owners will feel they can move in without having to undertake an immediate facelift. Share the following advice with sellers:
Keep improvements simple. A total redecoration isn’t necessary or even advisable. The objective is to arrive at a widely acceptable and reasonably current color scheme in paint, counters, and floor coverings.
Don’t aim to create a design showpiece. Realize that following the purchase buyers will often change a home significantly to make it their own. The sellers’ objective is to allow them to feel that their changes can happen in time over the next years; that they’re not glaringly and immediately necessary
Focus on the big stuff. If the interior of a home looks current and the landscaping, yard, decks, and patios are well kept and serviceable, the onus on buyers to make significant, immediate changes lightens. As a result, they’ll be more likely to buy the home. They’ll also be more apt to make a more competitive initial offer than would be the case if the home presented obvious exterior or interior color or repair issues. Any changes a buyer has to make to a home comes out of money they must have, not money they can borrow. Many buyers will use that fact as one of the factors of which home they buy now.
A little paint makes a huge difference. Repainting is one of the most cost effective ways to freshen the look of a home, and even to disguise design shortcomings.
Steer clear of the latest trends. Counsel clients away from the current rage in deep wall colors. Advise them to create a warm, blank canvas that any prospective buyer can work with.
Correcting defects If a home has defects, the seller has two choices: Fix them or provide commensurate monetary compensation to the buyers.
For example, if a roof needs repair or replacement the improvement will be expected by both the bank and the buyer. The seller can offer one of the following two remedies:
- Handle and pay for the repair or replacement.
- Provide the buyers with sufficient compensation to cover the cost and hassle of correcting the defect themselves. Hassle compensation is money above what it costs to professionally correct the problem. The amount extended for hassle compensation differs by task and buyer. In most cases, though, if buyers have to collect and decide between contractor bids, arrange for repairs, and check the work of the contractor, they’ll want some compensation for their time and effort.
Enhancing first impressions Any cost-effective improvement that adds curb appeal or enhances first impressions can augment the sales price. Follow these tips:
Create dimension on the exterior of the home by adding shutters or fish scale over a garage gable, selecting a better color pallet and, certainly, spending a few hundred dollars to plant annuals to color up the exterior walkways. The effect will increase the probability of a sale and positively influence the sale price.
Inside the house, after improving the home’s paint color scheme, advise sellers to assess the quality of the home’s hard surfaces, including carpet, tile, vinyl, and counter tops. Replacing surfaces is often far less costly than buyers anticipate. Many choices look rich but aren’t. A seller doesn’t need to put slab granite on the kitchen counters; simply updating old, cracked, chipped Formica will deliver a great improvement and pay off when it comes to price negotiation. Choose a light, bright surface and the change can contribute the feel of a larger, lighter room.
When working with a limited budget (as most sellers do) counsel the sellers to improve surfaces in core areas first. Focus on the areas most used by buyers, which include the kitchen, family room, dining area, and master bedroom. Improvements to skip As a general rule, I advise sellers to skip any improvement that isn’t simple or doesn’t affect curb appeal.
Improving curb appeal – the home’s ability to show well in a drive-by test – is essential because you want to get the prospect in the door. After that, limit improvements to necessary repairs, fresh paint, new hard surfaces, and a good cleaning.
When sellers ask about replacing cabinets, remodeling rooms, building bookshelves, replacing siding, adding decks, and even finishing basements, share the following facts:
- According to Remodeling magazine and the National Association of Realtors, the average major investment update on a home recoups 81% at resale, or only four out of five dollars spent.
- The highest average rate of return results from a minor kitchen remodel, which yields 93% of the costs incurred.
- The lowest average rate of return results comes from finishing a basement, which yields a 76% return.
- The more money spent, the higher the risk for the seller and the lower the chance of making a return or even breaking even.
Published: March 26, 2010