If you are looking to sell your home it’s always nice to know what you can do to help increase your asking price. You just have to make sure that any improvements you make are going to translate into a higher dollar sale. Many people assume that for every dollar spent, they’ll recover, and some, but it doesn’t work that way.
Obscure Advice First
Let’s get the obscure advice out of the way first. Sometimes homeowners are stuck between selling the home because they may not be able to afford it, and staying in the home and refinancing it. It’s actually a common spot to be in. It’s important that if you are going to sell your home make sure you’re absolutely certain that’s the course of action you want to take. If you list your house, then take it off the market and decide to refinance, you’re going to run into one big obstacle. Most lenders will not refinance you until 6 months to a year have passed since it was on the market. If you do find a lender willing to give you a loan, you will have to pay an inflated interest rate of at least a percent higher than you would have qualified for. That will cost you thousands upon thousands of dollars and is usually a deal breaker for most folks. Be sure before you list your home for sale because that may be your only option if you should change your mind.
A Word about Appraisers
Just because you spent $12,000 on that new bedroom you added on to your house it doesn’t mean you can raise your price that much or more. Or if you just put in a new pool or cabinetry in the kitchen it doesn’t mean you can now sell your house for more. Appraisers are governed by certain guidelines and cannot arbitrarily raise your home’s value twenty grand because you spent that much on renovations. They have a template of sorts that they have to go by, as well as using comparable sales to establish a home’s value. You might also find that homes similar to yours with an extra bedroom may only be going for $5,000 more than your home is worth. If after contacting builders you find it will cost you $8,000 to put in that extra room, you’d better hold off on the addition until the market is more favorable.
What are Comparable Sales?
In order to establish a value for your home, appraisers use sales of nearby homes that are similar in size, style, and amenities as your own to establish a value. They have to use recent sales, usually no more than 3 months old. Some lenders will let you use comparables that are 3-6 months old. The home sales used have to be actual sales, not listings. We all know how listing prices can go so you have to use sales prices only. Homes used as comparables also have to be fairly close, and in a similar neighborhood as yours. You can use houses in fancy gated community as comparables unless you live in a similar neighborhood, no matter how close the homes where that sold. Next your appraiser has to bracket your home if at all possible. In other words, he has to find a comparable home that sold that was a little nicer than yours, and one that was not as nice. That way you come up with a low figure and a high one, and your appraiser will assign a median value to your home. That is basically how comparable sales work.
More Bang for Your Buck
If you do decide to do some work on the home before listing it, you need to do things that will give you the most value for dollars spent; more bang for your buck. Imagine a car after it gets detailed. You spend a couple hundred bucks and when you get it back it actually looks brand new. If you decide to sell your car you’re going to be able to jack up the price by a grand not just a couple hundred bucks. Do the same for your home. Give it a detailing so when you’re through your house looks twenty years newer. As far as what to do for the detail work, only you know what your homes issues are. Maybe the caulking around the windows are discolored or cracked. Maybe you have some mildew or water stains on the ceiling or walls that need painting over. What about the carpets. Maybe an area rug is in order; it’s a lot cheaper than replacing your carpets. You might consider refinishing the cabinetry in the kitchen instead of spending ten grand on new ones. These are all things that are fairly inexpensive that will do wonders for the look of your home.
Before you do the Really Big Stuff
Before you go out and put in a new pool or add another room to your house, do some checking to make sure you can at least get your money back from the sale. After you find out how much that new add on, for example, will cost, it’s time to contact an appraiser. The first thing is to go to the appraiser or company that inspected your house the last time. He will have the best idea as to how much your home may have increased in value since the last time he was there doing an inspection. If you have done any improvements since he was at your home last, be sure to tell him so he can adjust the value accordingly. Most can jump on a computer and within a few minutes give you a good idea what your home’s new value may be. They are usually happy to do this because they want your business. If you have determined that you can add to your home’s value considerable by adding a new room, then knock yourself out.
A Word to the Wise
Before you start any remodel project make sure you have the money to finish it. Very few lenders will refinance your home mid-project; it has to be finished. That is actually a very common occurrence in times where the economy is bad and homeowners are feeling the crunch. Do your due diligence and you’ll be happy you did.
About the author: Nick Simpson is Social Media Coordinator at Blindsgalore, a leading provider of plantation shutters with different colors and more.