Selling

Setting the value of your home

Along with location and condition, the pricing of a house is a major component of the reasons why a house will--or will not--sell quickly. Although the pricing should not be dealt with lightly, some sellers have a tendency to put too much emphasis on the price and not enough on the condition, ending up with a house that is overpriced for its current condition and the overall market. Even if you find an unaware buyer that appears willing to pay the high price, when the buyer applies for a mortgage, the chances are good that the lender's appraisal will force the price back down to market value.

It's important to get it right the first time

Care and time should be taken when establishing the original listing price for several reasons:

If the house is overpriced, it won't sell. If it doesn't sell and sits on the market the listing quickly becomes stale.

If you overprice the house with the intention of reducing the price later just to "see what the market will bear", when the price of the house is lowered, it signals to buyers that it was (and still may be) overpriced.

If the house is underpriced, it most likely will sell quickly--to the detriment of your net proceeds.

Some factors that affect the price

Location: You can't get away from this one. If your house is located in a desirable area that is in demand, you will be able to get a higher price than you can for the same house in a less desirable area.

Condition: A house that has been better maintained and shows better will always sell for more than one that has had deferred (neglected) maintenance and needs work.

Desirable amenities: If a house has amenities that are currently popular in the marketplace, it will bring a higher price.

Repairs to Make Before Selling

Nothing turns off a potential buyer faster than peeling paint, a broken window, or a splintered front step. It's wise to make necessary repairs before you put your house on the market. A house in good condition demonstrates pride of ownership—one of your best sales tools. Start by covering these areas:

Inside the House

Fix or replace damaged flooring, such as torn linoleum or cracked tiles.

If you can't afford to replace damaged or worn floors, consider offering the buyer an allowance for renovation.

Fix any drains faucets or plumbing fixtures that aren't operating.

Fixes can range from replacing a faucet washer to buying a new toilet.

Paint the interior.

Fill and paint any cracks or holes in the walls. (You may need to repaint entire walls to mask such repairs.)

Replace burned out bulbs and broken electrical sockets.

Turn on all the lights before a showing.

Replace or fix broken stairs.

Fix any creaks as well.

Replace old locks and doorknobs.

Make it easy for a buyer to walk in.

Fix any doors that don’t open easily, including the garage door.

If your garage door opener doesn't work, repair or replace it.

Outside the House

Replace cracked windows and torn screens.
Don't let your house be shown with the equivalent of a black eye.
Fix cracks in the driveway and entry walkway, and clean up stains.
If the driveway requires major repair, it may be preferable to offer the buyer an allowance for the work.
Paint the exterior.
Touch up peeling paint, window frames, porches, and shutters. Repaint the entire exterior if it is drab or peeling.
Replace broken gutters or missing downspouts.
Good drainage is key to passing a home inspection.
Replace or fix broken stairs.
It's a matter of both safety and aesthetics.
Reseal the deck and repair broken boards.
A new coat of sealer can spruce up a fading deck.
Repair the roof, replace shingles and tack down loose flashing. If the roof is old, you may want to replace it and adjust your sales price accordingly.

Prioritize Your Home Repairs

Maintaining your house is easiest when you approach it season by season. But what if you discover that you have several major repair projects competing for your attention? In most cases, your budget will dictate which projects to tackle first, but it's also important to ask yourself the following:

Is there potential water damage?
Repairs that prevent water from leaking into the house are more important than cosmetic projects (such as filling a hole in an interior wall). Replacing a roof or sealing cracks in the foundation are projects that should be completed immediately.

Is safety an issue?
Ensure the safety of family and visitors is as important as keeping your home dry. Keep steps in good condition, replace broken boards on porches or decks, fix electrical outlets, and set your hot water heater to the right temperature (120ºF is usually hot enough).

Is a home system involved?
Plumbing, electrical and heating systems are critical to your home's operation and your comfort. Make these repairs as soon as possible. Hire a professional to make major repairs such as replacing faulty pipes, fixing circuit breakers, or installing a new thermostat.

Will the repair improve your insulation?
Repairs that improve insulation include tightening loose window frames, caulking around doorways, and patching holes in walls. The sooner these repairs are made, the faster you can lower your heating and air-conditioning costs.

Is it a cosmetic repair?
Cosmetic repairs range from patching holes in the wall to replacing an old light fixture. They are ideal winter projects, but can be performed at any time.

Which Improvements Pay Back?

Compiled from several published surveys:

Recouping your remodeling investment may be your goal when you sell your house. But when it comes to resale value, all home improvements are not created equal. As a rule, kitchen remodeling projects and bathroom additions almost always pay back 90 percent or more of their costs. However, finishing a basement usually pays back less than 50 percent. Other improvements fall somewhere in between.

Consider these payback estimates* for the most typical home improvement projects:

Understanding payback value:

Payback value depends heavily on the real estate market and prevailing property values. If the market is slow, expect to see less payback than you would in a fast market. Also, consider the neighborhood: If you remodel your house to twice the size of the other homes on the block, it is unlikely that you will be able to sell at double the price. Issues that can influence payback value include:

Type of improvement
Kitchen and bathroom remodeling projects consistently return the most in resale value and almost always help sell a house. Converting a basement into a family room yields the smallest return on the investment.

Scope of improvement
Projects can be large or small. Sometimes, the cumulative effect of small projects can pay back more in resale value than that of larger projects. Small projects tend to be cosmetic in nature: fresh paint, new doors, garden windows, and ceiling fans. Large improvements involve adding or upgrading living space.

Desirability
Today's fad may be tomorrow's standard. Backyard decks, for example, were difficult to find 30 years ago; now they are common. Decks may not have paid back very much in resale value decades ago, but as decks have become more desirable, their resale value has increased.

Cost
The price of home improvements fluctuates depending on economic conditions and region. If remodeling costs are particularly high in your area (or home sale prices particularly low), you may not recoup as much on your investment as you would if costs were in sync with sales prices.

TIP: If you are financing your home improvements, the best time to apply for a loan is when interest rates are low. The less you pay to borrow money for the job, the less the total cost of the renovations.

Beauty Basics:

After you've made basic repairs. The task of selling your home boils down to making the house as clean, clutter-free, and inviting as possible. Now's the time to make cosmetic improvements: Paint a dingy room, rearrange furniture, hang up artwork, or freshen your front entrance with flowers.

Make sure you or your agent has plenty of brochures available to set out on the entry table or on the kitchen counter. The hard part will be keeping up appearances as long as your house is for sale. Go through this checklist at least every other day to make sure that your home is tidy.