When you put your home on the market, it’s important to ensure your it looks its very best and that everything is in working order but when it comes to performing major remodelling or home improvement projects, statistics show that you’re unlikely to recoup the costs, so careful consideration is needed.
“If you’ve owned your home for five years or longer, or if you’ve been putting off maintenance tasks that you know needed doing, you may have a fair amount of work to do but not all repairs are equal in this instance,” says Grahame Diedericks, Manager Principal for Lew Geffen Sotheby’s International Realty.
“And, with the costs of materials at an all-time high, you can’t afford to make mistakes at this juncture if you hope to realise the biggest possible return on the sale of what is probably your largest asset.”
Diedericks says that the first thing to bear in mind is that sellers are required by law to ensure that the property is legally fit for sale and before the transfer can take place and they cannot fraudulently conceal major defects.
“If you plan on selling, make a list of all the significant repairs you think are required and if you aren’t sure which are critical, it would be wise to hire a home inspector who can prepare a report listing necessary repairs, especially those that you would be required to disclose them to potential buyers.”
He recommends that once you have your list, divide the repairs into three categories:
- Minor and relatively inexpensive repairs that can easily be done before buyers come to view, such as landscaping, cleaning/repair of gutters or a fresh coat of paint.
- Major issues that you’ll either have to fix or otherwise disclose to buyers, such as water and electrical systems, structural problems, wood-destroying insects or hazardous materials such as asbestos.
- Issues from either of these lists that have the greatest potential to become deal breakers that deter potential buyers. This could include a cracked foundation, extensive termite damage or an ageing roof that needs replacing – and this is the list you ultimately want to focus on.
“What you add to the final list largely depends on your goals and the prevailing local market – does a quick sale take precedence over maximum profit, or is your main goal a high selling price?
“Ask your agent if they have noticed any issues that potential buyers are consistently walking away from and ask them to help you determine which repairs will strike the balance in between.”
Diedericks says that for those repairs that you absolutely can’t afford to fix —but which can’t afford not to fix if you want your home to sell — you have three options:
- Obtain repair estimates, then proceed with the sale as planned and disclose these problems as required by law. Should the issues surface in the buyer’s inspection, be prepared to fix them before closing or lower the sales price.
- Make the minor, inexpensive repairs, then have your home appraised to determine your its market value. List your property at that value, minus the cost of repairing any potential deal breaker issues that your agent has identified. Share the estimates with serious buyers and their agents, explaining that you lowered the price and why.
- Don’t make any repairs and sell your home ‘as is’ or voetstoets, but price it a good deal lower than its actual value to reflect the home’s condition. The lower pricing could generate a lot of interest, especially from investor purchasers but it can be a gamble in a tougher market, so discuss with your agent first.
“Keeping a home in good repair and doing regular maintenance can pay significant dividends when it’s time to sell as there will almost always be fewer problems to fix and those that there are, are unlikely to be serious or costly,” concludes Diedericks.
“Remember that if a potential buyer has to decide between two properties, he or she will most likely opt for the one that requires the least work and additional investment.”