Before they put their home on the market, sellers have to make some big decisions: How much sprucing up and repairing does the home need to draw the right buyers?
Generally, the work will fit into three categories: cosmetic improvements such as paint and refinished floors to give buyers a good first impression and fix largely minor issues resulting from normal wear and tear; upgraded bathrooms and kitchens to draw higher-end buyers, and repairs, including a new roof or furnace, to correct major safety and infrastructure issues.
The decision depends on the overall condition of the home — whether serious issues will need to be prioritized — and how much money the seller is willing to spend to reap a particular return.
It also depends on the costs and benefits they get from repairs. Before starting a repair, determine if you will recoup the cost. An agent can help you make this analysis. You also can ask a contractor for an estimate of the repairs — many will offer free assessments after a walk-though.
While high-end renovations may help to get top dollar for their properties, experts say it may make more sense to first determine if any major problems need to be addressed.
A pre-listing inspection is a first step to uncover problems
A pre-listing inspection is used to detect hidden issues in the home. It also can turn up potential ways to improve a home. A seller must decide what repairs to make once an inspection takes place. Breaking them down into major and minor issues can be a helpful first step.
Priority 1: Major repairs
This work should be mandatory because it involves health and safety issues. News of putting an unsafe home on the market will destroy any trust a buyer has in a seller's transparency. It also will undermine your marketing efforts because it will generate negative word-of-mouth about your home.
- Cracked foundation
- Worn roof
- Structural weaknesses such as broken rafters
- Mechanical issues, including heating and cooling system failures
- Plumbing issues, such as old septic tanks that need replacing or leaky pipes
- Wet basements after rain
- Stains on a ceiling from a leaky roof
- Signs of aluminum wiring (melts easily, fire hazard)
- Drainage issues (such as a lot that directs rainwater toward a house, instead of away from its foundation)
- Signs of mold (black spots on walls in dark, cool places or a scent of mold in the home)
- Outlets in bathrooms without circuit breakers
- Signs of termite damage
Priority 2: Minor repairs
These aren't as critical as health and safety issues. You may only have to focus on these repairs if you're in a buyer's market and there are no major structural problems. In a buyer's market, there are more homes for sale than buyers. Repairing even the most minor of items can boost your home's image and help it stand out from the competition.
- Chipped paint
- Interior doors that get stuck
- Outlets that don't work
- Light switches that don't work
- Minor scrapes in drywall
- Leaky faucets
- Defective garage door opener
- Burned-out light bulbs
- Windows that are hard to close and lock
- Broken doorbell
Priority 3: Wish list
Upgrading your home's amenities can boost the listing price and generate enthusiasm among buyers. Ask your agent if these are cost-effective. Also consider the length of time it will take to complete and determine if your timeline to move will be affected. If you're unsure, ask a general contractor to walk through your home and give an estimate of how long it will take.
- New cabinets in kitchen
- Installing a kitchen island
- Replacing old countertops with quartz
- Repainting rooms
- New appliances
- Downstairs powder room
- Smart home thermostat
- A doorbell with a camera and intercom
- Refreshed bathroom decor, such as new tiling or a new shower
- New Jacuzzi
Known issues must be included in the property disclosure form to protect the seller from any potential legal issues, said Khali Gallman, an agent of Coldwell Banker Realty in Columbia, South Carolina. Sellers are required to use the forms to notify buyers of problems in the home. Some states require the form to be filled out before the home's listing and others require it before the offer is accepted. "By omitting any known defects, the buyer could sue for breach of contract," Gallman said.
Disclosing those issues can be turned around as a marketing tool to encourage buyers instead of turning them away, said Jeff Justice, an agent at Summit Sotheby's International Realty in Salt Lake City.
"Buyers want to walk in with eyes wide open, and transparency builds trust," said Justice. "We’re not out looking for trouble, but we do want to understand any objections that might appear."
"If you’ve taken the time to complete a pre-listing inspection, it should absolutely be included in your disclosure documents," Justice added. "It’s simply the right thing to do. For sellers, the keyword is ‘disclosed ’— that mindset helps create smoother transactions and builds confidence with buyers from the start."
Keep in mind that updates are always more appealing to potential buyers, said Paula Camarena, owner/operator of Pillar To Post Home Inspectors of Orange County in Huntington Beach, California. They attract more buyers, which could possibly lead to more offers with a bigger payday to the seller, she said.
Sellers should have realistic expectations and a budget they should stick to if they don't want to spend more money than they could recover, Camarena said.
Price adjustments instead of repairs often make sense, especially if a property is sold as-is.
Prepare for negotiations
Knowing the problems with a house in advance will give sellers a negotiating advantage, said Steph Mahon, a real estate agent at Dwell New Jersey in Westfield, New Jersey. Sellers will be able to set firm boundaries on what they will fix and offer credits instead of repairs to close faster.
Inspection negotiations deserve the same level of preparation as offer negotiations, she added. "Prior to going live, sellers should work with their agent and thoroughly evaluate their net proceeds to understand their true post-closing outcome. And no matter how beautifully maintained a home is, it’s wise to anticipate potential inspection-related repairs or credits in that financial picture."
Sellers should have a realistic expectation of their negotiating power if they choose not to make repairs, said Gallman. They should consider variables like the age and condition of the home, market competition in the area and how long they would like the home to be on the market, she said.
If sellers are in a rush to part with the home, they should be ready to adjust their list price to reflect the cost of repairs a buyer is likely to make, said Gallman. "If time is not a factor, I would advise to fix any minor issues that are discovered in the inspection."