Over the course of a year, many of my clients will consider renovating a home prior to selling the home with the hope of get a higher price. Picking out new flooring, paint, fancy new counters for the kitchen and other upgrades for your home is a lot of fun. Upgrades in your home will likely allow your home to sell quicker. Before you begin, you might want to consider what your home may sell for and what the appropriate budget for your project will be.
When I look to purchase and renovate homes, I look for properties that you might consider a “diamond in the rough.” Generally, a home that is 20-30 years old needs a facelift to look more trendy and modern. Buyers generally like these older homes if the interior is updated to reflect the current housing trends. As I put together a budget to renovate the home, I consider:
- Appraisal: What is the highest potential appraisal value of my home? Even when a seller sells a home above the market value, if the lender’s appraiser will not support the sales price value, the home will only close at a price the appraiser will support.
- Comparative Market Analysis: Most real estate agents are able to perform a Comparative Market Analysis (CMA) when a current appraisal is not available. A comparative market analysis should give an accurate idea of how a home stacks up against comparable sales within a mile radius of your home. All comparable sales used should be no older than six months to give a correct approximation of the current market.
- Pending Home Sales: Pending Listings or homes that are currently under contract waiting to close escrow may indicate where the market is headed. If pending properties are selling for less than previous closings, then the market is declining. If pending properties are higher than previous sales then the market is appreciating.
- Neighborhood Competition: What do the recent sales in the neighborhood reflect? How many homes are currently active in the area? If other sellers are renovating homes prior to selling, then top market price is probably in place. If the owners are not renovating before selling, then the top market price for a renovated homes is likely higher than recent sales.
- Remodel Costs: When you feel comfortable with what the top market price is in your area, consider establishing a budget for your project. Picking out all the upgrades is fun and you could easily overspend on the project. Keeping your remodel costs close to your designated budget will allow you to recoup your costs when you sell.
Do you want to learn more about renovating your home before your sell? Contact us at (602) 753-0177 or www.ThompsonGroupAZ.com.