The baby boomer generation (born between 1946 and 1964) will have a significant impact on the housing market over the next several years. Baby boomers currently account for 40% of U.S. households but hold 54% of household wealth. Experts predict that this group will spend $1 out of every $4 on new home purchases or rent in the next five years.
According to research by The Demand Institute, two-thirds of baby boomers don’t plan to move anytime soon. Of those who are planning a move, 54% are looking to downsize, while 46% are looking to upsize, looking for a more ideal home to retire in than their current property.
If you’re a boomer thinking of moving, you may be asking yourself how you can get top dollar for your current home. Whether you are retired and on a fixed income, or experiencing sticker shock when shopping for a new property in the current market, you need to make every dollar count.
Conventional wisdom dictates that a home should be in tip top shape before it’s shown to sellers (conventional wisdom would be right). Of course, that means cleaning and decluttering, making any needed minor repairs, sprucing up the landscaping, and so on.
One question you may be asking is, “Should I renovate before I sell?” While it’s definitely something to consider if your house is older and hasn’t been updated in a while, the short answer is, “It depends.”
The Case for Renovating
All things being equal, it’s true that an updated home typically sells faster and is more likely to fetch top dollar. Many buyers today are putting all of their savings into the down payment and furnishings, so they prefer a “move-in ready” property that doesn’t need a lot of work. Homes that aren’t updated can be easily passed over – or buyers will want to discount the price steeply because they consider it a “fixer upper.”
Buyers often look for updates in the kitchen and bathrooms, but they can also be turned off by other things that make the property look dated (popcorn ceilings, wood paneling, worn or dated carpet, even old doors and windows). First impressions matter. A buyer who walks into an outdated kitchen or a dingy bathroom may not even want to see the rest of the house.
So if a renovated home sells faster, and often brings in more money, what’s the downside?
For one thing, major renovations can be expensive and it’s unlikely that you’ll see a 100% return on your investment. According to Remodeling Magazine, most common renovations return an average of 50-80%. Although a higher return is certainly possible depending on the neighborhood and your particular situation, it’s not guaranteed.
Also consider that, given the current market, you may need to spend more on a future home than you planned on. It’s a good idea to price check homes in your preferred area before you decide how much money to spend on renovations or updates for your current home.
Renovations can be messy (what’s your tolerance for noise and dust, and workers tromping through your home for weeks?). Renovating also takes time – time to find a contractor, time to schedule and complete the work. If you’re in a hurry to sell, renovations may not fit your timeline.
Best Bang for Your Buck
Whether or not you should renovate before putting your house on the market depends on many factors, including how much you are willing to spend knowing that the ROI won’t likely be 100%. However, certain renovations have better ROI than others.
Kitchen and bath renovations are among the most sought after updates, and some of the main areas that buyers consider. Yet, according to the 2015 Cost vs Value Report from “Remodeling Magazine,” the average ROI for these types of projects is only 59-70%. On the other hand, the report shows items such as steel front doors and stone veneer and siding are returning 80-100% of the investment.
It’s important to talk to your real estate agent to find out what type of updates buyers expect in your neighborhood. You don’t need expensive new flooring and granite countertops if simply upgrading the appliances or replacing the cabinets will be enough to impress buyers.
If you’re really on a budget, consider simple and inexpensive updates such as painting, replacing the carpet, hardware on cabinets, faucets, etc. These can typically be done rather cheaply and without too much disruption – you can probably do some of the work yourself – and they are worth doing if they make your home look less dated. Talk to your agent and get their advice based on the current market in your area.
Remember, if you want your home to sell quickly and for the best possible price, you have to put its best “foot” forward. This may mean spending some money to spruce it up – just don’t go overboard.