Want to get top dollar for your home when you sell? With some U.S. real estate markets showing signs of fatigue, there are things you can do to increase your home's value — or just make it more salable — without spending a bundle.
But before making any decisions as to what improvements need to be made, it is important to use your common sense first, advises Pamela J. O'Connor, president and chief executive of RELO/Leading Real Estate Companies of the World, the largest network of independent real estate firms in the U.S., with 4,700 offices and 120,000 associates. "Think like a buyer who is looking at your house," she says. "Think in terms of relativity to the competition in your neighborhood, because it is so dependent on what you are up against. If you live in an expensive area, or an area with a lot of new construction, and you have an outdated kitchen, you may need to improve it."
Be careful not to over-improve your house, O'Connor adds. "You should think what you are up against in terms of what you want to spend. People shouldn't spend a lot of money to remodel a kitchen in a neighborhood where it simply doesn't command it. Maybe all you need to do is replace a ceiling fan, paint the cabinets and replace door pulls."
Newly remodeled kitchens and bathrooms can make a home more marketable. "But rarely do you get a 100 percent return on any kind of remodeling job you might do," says O'Connor. Indeed, a remodeled bathroom typically returns 90 percent of your investment, while a major remodeling job on a kitchen will return, on average, only 75 percent of the investment. It is better to remodel a kitchen in neutral tones so it appeals to a broader range of people, says O'Connor, adding to "do it a year or two before you sell the house, so you can enjoy it."
Many improvements that will provide the best returns are ones that you can do yourself, says O'Connor. Many of the supplies you might need for a minor renovation can be found at such home improvement stores as Home Depot, Lowe's or even at your local Wal-Mart Stores or Sears Holdings stores.
Since everybody's taste is different, however, it may not be wise to spend too much money to change things, because it may not be what the buyer wants. "Keep improvements on par with other homes it will be competing with, and try to appeal to the broadest group of buyers as possible," says O'Connor. "Most importantly, be objective. Sometimes, you may need a real estate agent, decorator or even a friend, to give you that consumer perspective."
If you don't do minor repairs or renovations, you may take a hit. O'Connor recalls a home in Dallas that was on the market for several million dollars. "The problem was the home's décor was very outdated," says O'Connor. "It had last been decorated in the 1970s. It had flower prints everywhere and shag carpets in greens and oranges. Potential buyers thought it would cost $300,000 or more to fix up. But if the owners had spent $100,000 in renovations, they would have gotten it back plus much more."
On the other hand, expensive additions to a property may not increase its value at all. A home owner in an expensive Atlanta neighborhood transformed his large backyard into a soccer field. The owner didn't recoup the investment he made when he sold the house, because the new owners didn't care for his choice of landscaping.
An experienced real estate agent who knows the market where you live can help you make key decisions about what improvements your home may need. Good agents will be able to tell you what you will and won't have to do. O'Connor advises, "If an improvement will really make the difference, you may have to bite the bullet and do it."
