The first aspect of selling a home for the most money comes from the product side of the equation. The product being the house itself and all of the components surrounding the house. In a sellers market where the seller has leverage in negotiations, expensive renovation to the property are costly and not worth the time and money. Yes, renovations do increase the property value of homes but not always enough to outweigh the costs. You as the homeowner and your real estate agent need to compare your property to your specific location and neighborhood to determine what renovations are warranted, whether or not you have the budget for it and if it’s a sellers or buyers market. For example, if a house is worth $150,000 in South Phoenix in a non desirable neighborhood, there is no sense in renovating countertops in exchange for granite countertops. You will almost never recoup your costs in this example because the location and neighborhood does not warrant this type of renovation. Now, if it was a luxury property in Paradise Valley, one should upgrade the home to fit that location’s demand because buyers in that area will seek luxurious renovations.
What Should You Renovate or Repair?
This depends on your goals and interests. Is your home in total disarray and needing lots of work? By “lots of work,” I mean the hvac, electrical, roof, bathroom and other expensive components are not in working condition. Do you want to sell it fast and not worry about renovating the property? If that is the case and you want to sell it as is, then you must price the home well below market value to attract buyers who are willing to renovate the property and take on the risk.
One, decluttering your home by throwing away, selling or donating unnecessary items is free and should be one of the first steps you take before listing your home for sale. After doing away with all of the unnecessary items, you should consider getting a temporary storage unit to put away all of the items you want to keep and items of value to prevent buyers or anyone else getting a hold of your valuables. Buyers do not want to walk through a messy and cluttered house.
Two, major components of the house need to be in working condition such as the HVAC, plumbing, electrical, hot water heater and roof.
Three, low cost repairs and renovations provide the highest return such as repainting walls a neutral color, replacing or washing old carpet, adding a kitchen backsplash, adding baseboards, replacing bathroom fixtures, wall switches, faucets, door knob/handles, adding bright new lightbulbs, replacing blinds, cleaning the front and backyard and adding plants to the front yard. These minor renovations are low cost and provide a great first impression to potential buyers. I would hire an experienced handyman to complete all minor renovations and repairs and leave large renovations and repairs to specialized tradesman.
Four, the kitchen and bathroom provide one of the highest returns on investment. Replacing toilets, fixtures, faucets, painting the bathrooms and cleaning the tubs and tiles can provide a new and updated look.
Finally, do not over complicate the selling process. Major renovations take a long time and are almost never worth the cost. In a seller’s market, it is best to complete a few minor repairs and renovations and list the property for sale. If you want to do major renovations to your property, do so because you want to live inside of it, not because you expect to recoup the costs when selling.
The second aspect to selling your home for the most money comes from the pricing side of the equation. To effectively price your home, we have to first understand your goals and interests. Do you want to sell your home fast and move or do you want to wait longer in hopes of getting a higher price?
- The first pricing strategy is listing the property slightly below market value to create a bidding war between buyers. This results in receiving multiple offers within a few weeks which your agent can then effectively leverage for you. After receiving multiple offers, your agent should go to the buyers and let them know that there is a multiple offer scenario and you as the homeowner are seeking the highest and best offer. This is my favorite pricing strategy because it causes the home to 1. Sell faster and 2. Sell for a higher price as a result of a bidding war between buyers similar to that of an auction.
- The second pricing strategy is listing the property at market value. Of course, an agent can only estimate what the market value of a property is. You will not know what the exact market value is until the property is listed for sale causing the market to speak for itself. This is the most common pricing strategy and is effective but will usually cause the home to stay on the market longer than listing it below market value.
- The third pricing strategy is listing the property above market value. Sellers believe this strategy leaves room for negotiating which can be the case. However, this strategy usually results in the home staying on the market longer causing buyers to gain leverage as the home becomes stale. If a homeowner were to choose this strategy, I would advise against drastically overpricing the home especially if it is a buyer’s market. If you were to overprice the property, there should be a higher quality product presented to potential buyers such as an in ground pool, renovated kitchen, renovated bathroom, new HVAC or another major aspect of the house that stands out compared to similar homes in the neighborhood.
To summarize, sellers tend to be scared that they will leave money on the table when it comes time to sell their property. However, what many fail to realize is that you do NOT need to accept a full price offer. In fact, if there were multiple offers presented within a few weeks, you can always ask buyers to increase their purchase offers. Several offers within a few weeks means the property was underpriced and the market will naturally raise the price if you give them the opportunity to. On the other hand, little to no offers within a few weeks means the property was overpriced and the seller should strongly consider reducing the list price to meet at an equilibrium with the buyer’s demand. The problem with reducing the price is that it looks weak in the buyer’s eyes and from a negotiating perspective. Also, the longer a home is on the market, the less leverage a seller has which is why I advocate to either list the property at market value or slightly below market value.
The final aspect to obtain the highest possible price for your property comes from the promotional side of the equation. This is an area where it is important to choose a knowledgeable agent who is also willing to spend their own money.
- Staging: Professional staging can be expensive which is why in a seller’s market, I don’t believe it is necessary unless the home is a luxury property. Another option is to stage your own personal furniture and items inside of your home rather than hiring a professional stager. Buyers have a hard time envisioning themselves inside of a home which is why staged properties tend to sell faster and for a higher price than non-staged properties.
- Photography: Photos can make or break your property’s listing. Many agents take pictures of homes with their personal cell phones which I think is absolutely ridiculous. Cell phone pictures are fine if you are going to sell your appliances or car online but not for an asset as expensive as a house. I personally hire a professional photographer out of my own pocket for all clients and I believe all agents should as well. Bad photos will result in buyers not even wanting to see the home.
- Description: The description of the property on the MLS and other sites should be accurate and state unique features about the property, new renovations and local neighborhood information.
- Open House: An open house is a great way to engage all buyers at one time rather than hosting multiple showings. An open house creates buzz around your property but must be done effectively.
- Syndication: Once a property is listed on the MLS, our network at Realty One Group with over 500 agents will receive a notification for it and the property will be syndicated across multiple real estate websites including Zillow, Realtor.com, AZcentral, Homes.com and hundreds of other websites and social media web pages.
If you’re looking to buy, sell or invest in property in the future, you can save my number as “Realtor Lasker” on your phone at 480-779-8579 and my email at TaxesAndRealty@gmail.com. You can also reach out with any questions. Good luck