If you’re considering selling, your first step might be to begin looking into which remodeling projects may make your home more attractive to buyers. But before you sign any contracts, keep in mind that there’s something unique going on in today’s housing market.
Many more homebuyers are competing for available houses, and renovations might not be as necessary as they were to sell competitively just a few years ago.
I’m selling my house: Keep 2 things in mind this season
It may help to know that:
1. There aren’t enough houses to meet buyer demand.
In a normal market, you’ll see a 6-month supply of homes for sale. But today, housing inventory has dropped far below this level:
- The National Association of REALTORS® (NAR) reports that there’s currently just a 2.1-month supply of available houses.
- This means competition among homebuyers is high, and homes are selling fast.
- The average house is staying on the market for only around 18 days — and is receiving multiple offers from motivated buyers.
In a hot market like this, it makes a lot of sense to list sooner. Buyers are snatching up houses as quickly as they’re listed.
Taking the time (and spending the money) to renovate before selling might cause you to miss out on this chance. It’s true that some repairs may be needed, but it’s a smart move to consult with a real estate agent to find out which improvements are important — and which might not make a difference to prospective buyers.
Homebuyers today are also more likely to tackle these renovation projects themselves, just to get the house they have their eye on. According to Home Advisor:
“When it comes to the number of home improvement projects completed, Gen Z homeowners are leading the pack, completing an average of 3.5 projects. Millennials closely follow Gen Z, taking on an average of 3.3 projects, followed by Gen X at 2.8 projects.”
“Boomers completed an average of 2 projects, and the Silent Generation completed the fewest projects, on average, at 1.8 per household. Compared to 2019, millennials are spending 60-percent more on home improvement and doing on average 30-percent more projects.”
In today’s competitive market, it can be prudent to allow the future owners of your home to remodel the kitchen or bathroom as they see fit, suiting their lifestyle and tastes. Cosmetic updates, like power washing your siding or touching up a coat of paint, may be a better use of your resources when selling.
No need to over-invest in your house by making updates homebuyers may not be looking for anyway. Work with a skilled agent to help you decide exactly which projects will optimize your listing, without taking too much money or time.
Am I better off selling my house or cashing out on rising equity to pay for bigger renovations? Find out now.
2. What matters most is getting a good ROI.
A common scenario: I’m selling my house soon and have plans for big upgrades. If that sounds like you, make sure to talk with your agent.
Ask how much ROI (return on your investment) a project is likely to bring and if it’s worth the price. Your home might benefit from a bathroom or kitchen renovation, roof or shingle repair, or another major fix — but certainly not all of these updates. You may be amazed to see how much interest there is in your existing house in this seller’s market.
“The 2020 Cost vs. Value report shows a predictable increase in costs for all 22 remodeling projects but a consistent dip in the perceived value of those projects at the time of home sale, as estimated by real estate professionals in more than 100 metro areas across the U.S. This results in a slight downturn on the return on investment for nearly all projects relative to the trends we saw in last year’s report.”
It’s usually suggested that you try not to over-invest in big-ticket updates if they won’t earn that cash back when you sell.
Home Advisor’s 2020 State of Home Spending report also finds that:
“The average household spending on home services rose to $13,138, an increase over last year’s survey results, where homeowners who did projects spent $9,081 on average in 2019.”
Before you decide to renovate, get in touch with a real estate agent and determine if it’s the most beneficial choice based on your local market and the state of your house. You may also find it helpful to contact a local loan officer and see how much home equity you’ve accumulated — and if this could be put to better use as a cash-out refinance to fund a major project or leveraged toward a larger down payment on a new house.
Right now, many sellers who are putting their homes on the market as-is are selling much quicker than expected. Making this move might yield you the biggest return. Since every home is different, consulting with your agent and your loan officer can set you up for success (and profit) when you’re ready to sell.
Love your loan as much as you love your new house
You: I’m selling my house. What should I do next? Us: Let us take it from here. Connect with a local loan officer who can help you prequalify for your next mortgage and assess your unique financial situation to find you an affordable loan that you feel good about. Reach out right now.
For educational purposes only. Please contact your qualified professional for specific guidance.
Sources are deemed reliable but not guaranteed.