To Renovate or not to Renovate

When thinking about selling, homeowners often ask me about what they need to do to get top-dollar.  Many agents are suggesting costly remodeling to make the home more appealing to buyers. However, with so many buyers competing for available homes right now, renovations may not be as vital as they would be in a more normal market. You should also understand that although your home may sell for more, you will not recoup the amount you spend.  According to the data from the National Association of Realtors, most interior remodeling projects will only return 50-70% of their cost. 

So, before you launch into a costly remodeling project, please keep these two things in mind if you’re thinking of selling this season:

There aren’t enough homes for sale right now.

Although we expect to see more listings entering the market this spring, a normal market has a 6-month supply of houses for sale, but today’s housing inventory sits way below that benchmark. According to the Otteau Group’s HousingTRAC Report, there’s only a 3.1-month supply of homes available today in Downtown Jersey City. As a result, buyer competition is high with many listings receiving multiple offers.

In a competitive market that’s moving so quickly, it makes sense to sell your house when buyers are scooping homes up as fast as they’re being listed. So spending any time or money on costly renovations before you sell just doesn’t make sense.  However, certain repairs on your house that could be deal-breakers for buyers like a leaking roof must be addressed.

In this market, it may be wise to let future homeowners remodel the bathroom or the kitchen to make design decisions that are best for their specific taste and lifestyle. Your dollars and time might be better spent working on small cosmetic updates, like painting the interior and refreshing the exterior. Here are some steps you can take that will maximize your listing, without overdoing it.

Focus on getting a good return on your investment.

When planning any bigger projects to tackle, you and your real estate agent will want to discuss the potential return on your investment and if those projects are worth the cost. Some homes do need a kitchen or bathroom renovation, roof repairs, or other major work, but not all of them. You might be surprised by how well your house could fair in today’s sellers’ market. Hanley Wood states:

“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.”

Before you renovate, please contact me to see if it’s the best course of action. You may find out that putting your house on the market as-is will help you sell quickly, and it may result in the best return on your investment. Every home is different, but a free consultation is a great way to get the conversation started.

Bottom Line

We’re in a strong sellers’ market, and that means you have the leverage to sell your house on your terms. Contact me today to determine if renovating is really the best way to spend your time and money before you sell.