First Impressions Pay Dividends - The Value of Home Improvements Pt 2

In the annual survey, NAR (National Association of REALTORS) attempted to provide a gauge for what return sellers might expect to recoup after doing home improvements.  In other words, if you spend $100 for the improvement, will it increase the value of your home $100, or more, or less - THAT is the question.

Based on this report, there was ONLY one improvement that returns 100% or greater.  Again, I refer to my advise in Part 1 of this series where I tell you that if you are planning to sell, don't "invest" in home improvement - it's sure to return you a loss.

Wondering what the one exception is?  (Drumroll, please....) Replacement of a front door!

This reinforces another piece of advice I give to clients – first impressions count, and in this case, it seems they pay dividends. 

In fact, I tell seller clients that 30% of the buying decision is made prior to arriving at the property, as they’ve usually seen pictures, have a clue about the area and know the price before they’ve considered looking at your property – they are 30% sold. Then, they make an appointment or maybe just do a “drive by” – this accounts for another 20%. Here, they are taking into consideration more intimate geographical decisions – your neighbors, the street, the outside of the home – all together referred to as curb appeal. A front door replacement has some affect in this calculation, too…. Although they haven’t touched anything or gotten an up close look, so it is still minimal.

Here it comes, they get out of their car. They imagine coming home to this place… do they like what they see? They stand for awhile at the front, waiting on someone to open the door. How much trouble do they have getting inside? Does the lock fall off the door? Does it unlock? Does the door look good? There is a lot of time spent here, and thus, the front door replacement would have an impact.  I also urge sellers to consider other details a buyer might notice if they were standing at the front door - cob webs, windows/screens, porch furniture and condition, cleanliness of siding, any adornment on the door or near the door - like flowers, wreaths, flags.... these all impact what the buyer thinks about who lives in the home, and how they care for it.  Worn door mats will cost you money on your sale - replace it or get rid of it all together.

From the front entry, another 25% of the buying decision is made. That means, if they enter you home with a positive impression they are 75% sold. What can they see from the front entry? In staging and marketing, there is a great deal of time spent on how to make this critical impression.

Once inside they place their furniture, figure out where they will sleep, entertain, if their furniture will fit… and all this together only accounts for 25% of the buying decision, but they must be 98% sold before they will put together an offer. As a seller, understanding this process is critical. Usually the first and last 20% a seller can not affect-they can not change the location of their property, they can not change the configuration of the home. They can price right and stage right – and that is the difference between sold and for sale, and where listening to a qualified sales consultant comes into play.

If you are thinking of selling, now or in the future, please call me. I am happy to help you.  Stay tuned to The Real Estate Whisperer for the next post in this series, where we talk in more depth about expected returns for various Home Improvement Projects.  If you missed the first post, go back and read it - make sure you know the difference between home improvements and home maintenance.

Getting Bang for Your Buck - The Value of Home Improvements

With this post, I begin a little mini series on how to spend your home improvement dollars wisely.  While buyers may enjoy these posts, they are targeted toward current home owners who eventually - tomorrow, next year or in 5 years, expect to sell. 

The number one thing I want to tell you is this:  If you're thinking of selling in the next year, DO NOT do home improvements - it will return you less than 100% of your dollars.  It's a poor investment. 

That does not mean not to do maintenance.  Sellers, when they are looking for dollars in their house, get confused as to what is improvement and what is maintenance.  Here's a rule of thumb - if the house should have those things, then it's not an improvement.

Replaced your roof last year?  Good for you, and good for your buyers, too.  But, SURPRISE! the buyers expected your home to have a roof - one that doesn't leak and isn't requiring immediate replacement.  New mechanics - like HVAC or water heater?  Nope, not an improvement.  Your buyer was looking for a house with heat and hot water - it was "assumed" that those things would come with the house. 

Please don't get me wrong - these things have value.  Look at your comps, is everything original, or do they all have replaced systems, too?  That's how you determine if yours might bring you extra dollars.  If you are just keeping up with the Jones's then your home value will be approximately the same as the Jones' home.

Of course, if you replaced 20 year asphault shingles with 40 year architectural shingles... well, that is an improvement.  If you now have a tankless water heater that saves hundreds a year in utility bills and never requires a waiting period to get more hot water, this, too would be an improvement.  If your HVAC was one zone (as are all of those in your competitor's homes) and your's is now a 2-3 zone, energy star certified system with an electronic air filter and built in humidifier - NOW we're talking improvement.  Did you replace your vinyl siding with Hardi plank last year and add stone accents.... cha-ching!  (You're still likely to recoup less than you actually spent, but you will see some added home price value.)

Many of these things may be invisible when someone is breezing through your home taking a quick look, so make sure that you are listing both major maintenance and home improvements when you're agent is preparing the marketing materials. And, remember, good bones and systems will not always equal the highest price. 

Buyers buy emotionally and justify logically.  Never once have I been showing a home and had a buyer just become awe-struck by a water heater and stare.  This is NOT where they fall in love with your home.

I am going to continue this series, in which I will discuss home improvements and the expected return for your investment based on a recent study by the National Association of REALTORS. 

I will also address how buyers will assess your home.  You may be surprised.  So, stay tuned for more..... http://www.therealestatewhisperer.blogspot.com/

If you're in the Washington DC Metro area and you'd like to find out what the sales in your neighborhood have been recently, order a market snapshot by clicking HERE. Or,  contact me directly at vchrisner@kw.com for a personal consultation.