Why (and how) do so many local sellers spend so much money getting their homes ready for sale?
Sellers in our area routinely spend tens of thousands of dollars on work and staging in preparation for putting their home on the market. (The amount obviously depends on the size and condition of the home, but $50,000 is pretty common these days). Why spend so much, when there are so many buyers out there?
The first part of the answer is that yes, there are lots of buyers, but there are also other homes for sale, so it’s important that your home compares well to the competition.
The next part of the answer is that cosmetic upgrades can significantly increase the sale price. If someone is approaching a home purchase in a very rational, logical way, they’ll look at what a reasonable price per square foot for the property would be, and use that to decide what they’re willing to pay. In contrast, someone who is in love with a property thinks about it with emotion. The properties that sell for crazy-high, top-dollar prices are not selling to buyers who are doing rational calculations. They’re selling to buyers who are in love, and what makes buyers fall in love is not square footage or room counts, but rather style and design, and the ability to see themselves blissfully living in the home. Most buyers can’t envision how much a property can be improved with basic changes. If parts of a home are not to their liking, they picture major remodeling, at high expense, requiring lots of time and attention (which many buyers don’t have to spare).
Here’s one example. If the buyers don’t like the kitchen in a listed property, they almost always factor in the cost of a complete kitchen re-do, which can reduce their willingness to pay by $100K+. Most kitchens can be radically improved in a short period of time for much less, by doing things like painting and replacing things like counters, faucets, flooring, hardware and/or appliances. If you spend $20K (to choose a round number) to refresh the kitchen, and it makes the buyer content with the space, they won’t have to subtract that $100K+ from their offer (and they’re more likely to fall in love!). To create the overall picture and get buyers to fall in love, sellers around here routinely do some combination of painting, floors, staging, gardening, and refreshing the kitchen and bath(s). If a seller ends up spending $50K and gets an extra $200K from the sale, the return from the investment is 300%. That’s why they do it!
Note though that it’s not enough just to spend money on preparation and staging. The work done needs to be well-chosen, and targeted to the buyer pool. I’ve seen far too many houses where they’ve done lots of prep work, but it’s badly chosen, so there’s little return. A good agent understands what appeals to buyers, and will guide the process to make sure the final look is one that will bring you top dollar in a sale.
How do sellers pay for the preparation work? Many sellers pay up front, but there are also ways to borrow the funds or defer payment for the work done until the close of escrow. The best option varies with the circumstances, but I’m happy to discuss the possibilities with you if you’re thinking of making a move.