That's good up to a point--remember the agent doesn't really care that
much about your bottom line; all they're _really_ after is a quicker
sale. Consequently, they're more than willing for you to spend money
that won't actually get returned to you simply to make the property more
attractive. So, it's a tradeoff between what is cost effective versus
time to judge what is best overall.
The most cost-effective are the cosmetics that aren't particularly
expensive and certainly anything that is actually a real eyesore such as
the wet/damaged ceiling tile.
Major remodeling efforts otoh, are quite unlikely to actually bring in
more than their investment cost unless truly extensive to bring the
house fully into a modern style and then it may require more return than
what other houses in the neighborhood are bringing.
"...remember the agent doesn't really care that much about your bottom
Isn't that what I just got through saying?
IMO most agents are still more interested in more commissions (sales)
than a (very) slightly higher commission on fewer, particularly w/
mid-level properties. The difference in commission on a $20/30k premium
just isn't so significant compared to getting the base commission
earlier and moving on. If the seller chooses to do more it doesn't
really hurt, but beyond the time frame, the increase in asking price is
really a second-order effect.
Talk about $1M+ properties where could be $500k price differential, then
the dynamics begin to change...the extra cash is enough to be worth
waiting around a while for.
If the OP puts 60k into the house, raising the sale price by 40k, the
six-percent commission goes up by $2400. The seller might be out $20k,
if my math is right. $2400 is not peanuts where I live. Plus any
kickbacks from contractor arrangements. The realtors in my area were
howling to the high heavens when the condo boom slammed to a stop.
'Twas music to my ears.. I beleive a few starved to death, but they
might have found an attorney's corpse to cannibalize :o)
The way the commission generally works, the agent gets
a quarter of that amount. It's divided between the listing
agent, selling broker, selling agent/broker. I might not be
perfectly correct, but that's the general idea. The agent
would walk away with a few hundred dollars.
Yes and DPB is right. With the type of flat percentage compensation
plan real estate agents have, the goal is to get the deal done quickly
and with the least effort. If you do the math, having someone put
10% of the selling price in upgrades into a house, doesn't make that
much difference in their cut to make it worth while. But if those
upgrades make the house sell quickly, that is of great benefit.
Also, here's another factor. Let's say the agent tells the
prospective seller that they should do major renovation before putting
it on the market. In that situation, if the seller takes the
advice, they are likely NOT going to list the house right away.
Instead, they are going to do the work, then list it. That could
take months and during that time, another agent, buyer, etc could come
along and the first agent loses the deal.
I agree with you there. It might even be worth the 10G to the owner
just to sell fast. I can see that, no problem. I was just saying, the
commission difference is probably not as much for the agent as one
My experience with selling/buying several houses over the years.
Fixing up things helps you sell the house but does not necessarily raise
the selling price much if at all. If it needs a lot of basic stuff like
carpet, paint etc then that will help you get up to the market value.
You be lucky to break even on the expenses. If you spend $5K putting in
new windows you can't automatically raise the selling price by $5K.
Your goal is to sell the house at or near the asking price, in as short a
time as possible. Fix anything that is broken or rotted. It's partially a
matter of first impressions, or comparisons between this house and others.
You should want your house to be the best of those being sold in the same
price range, and so you have to walk a line between leaving a bad impression
and over-improving your house. If you put obstacles in the way of the sale,
within a few weeks the agent will want to reduce the price or offer other
incentives to buyers in order to recreate interest in the house.
Buyers assume that an owner has made efforts to fix anything broken; visible
damage leads to the conclusion that there is a lot of hidden damage -- even
if the visible problems are minor. Most homeowners know implicitly that a
repair project often uncovers further problems and repairs rarely come in
under estimate. You don't want potential buyers walking through and
thinking, "I'll have to replace those cabinets, that countertop, that
refrigerator" or "Those watermarks on the ceiling tile mean that the roof
also leaks. That's a major expense that will have to come off the offering
The broken ceiling tile needs to be replaced -- if the new ones are obvious,
the whole ceiling should be replaced. If the roof leaks, fix it and make
sure the new shingles blend in with the old. Check around outdoor moldings,
especially around the garage door. The bottom of the door trim is likely to
be rotten and should be replaced. The impression you want to leave with the
potential buyer is that the present owner is fastidious and doesn't get
behind in getting repairs accomplished.
If possible, move out before putting the house on the market, then repaint
and stage the house. It's a lot easier to make repairs at this time, with
no furniture in the way.
Three suggestions for your friends: (1) Get your own home inspection by a
qualified inspector, who will probably find things you hadn't thought about.
Don't argue with his/her report, because a potential buyer is going to get
similar information. (2) Walk through the house with a still camera and
take pictures of every room. Instead of looking at the house, look at the
pictures, really closely. The pictures are going to show you things that
need repairs or replacing, that you otherwise would just walk by. (3) Find
a few other houses like this one that are on the market, and walk through
them. This house has to look better than any of them.
Selling fast and at a good price requires an investment in marketing the
house -- especially in this market.
I'm selling a row house in that general area. I think how much
updating/repairing needed depends in part on what the neighbors have
done. One thing I discovered when I started reading the listings of
other houses in my neighborhood was that the descriptions were almost
cookie cutter - "new kitchen, freshly painted, new carpet or refinished
floors". I pretty much had to do that to be competitive... or I'd have
had to list at a lot less. It also depends on the type of neighborhood
and what type of people they expect to buy the house. Many people moving
to my neighborhood are just starting out and don't have the money to do
that type of upgrades. Plus most would be moving from an apt or a
smaller house and not have the money to live in the old house while
fixing a new one (and most likely need the money from the sale of #1 to
buy #2). OTOH, the neighborhood I moved to is a step above that and more
desirable in general, so the owners there don't do as much because
buyers are interested in the location. This may be where talking to
agents would help the most - telling them what the "norm" is in that
neighborhood and what buyers are likely to expect or be attracted to.
I recently sold my mother's house and one thing I learned doing that
(and talking to others) is that buyers will want a discount for any
perceived imperfection, even if the seller has already taken them into
consideration when setting the price.
Suggestions for the friends. Talk to other agents and see if they get
the same recommendations over and over. Go to open houses in the
surrounding areas and see what the competition is doing. Subscribe to
some of the online real estate websites that will let them monitor
houses being listed in the area so they can see what's being advertised.
Maybe find a more home selling specific audience to ask. One that I've
found helpful is the HGTV.com's message boards. The friends could post a
link there to photos of the house and get other people's reactions and
free (for what it's worth <G>) advice. I've seen people get some really
helpful input there, and often for things that don't require a lot of
money, like what color to paint a room, or ideas on curb appeal.
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