Dear Monty: We recently read an article urging homeowners to update their homes before putting them on the market. According to the writer, the rationale for doing so is that homebuyers are attracted to up-to-date homes. The writer states that these homes bring more buyers, so the competition between buyers is likely to get a seller more cash. The article came across as, “You’d be crazy not to update.” We are on the fence about whether to fix up first or let the buyer decide. Does your experience support the article’s contention that updating is a necessity?
Monty’s Answer: The notion that an updated home automatically translates to more cash in the seller’s pocket is near impossible to quantify. There are so many other reasons that a buyer may choose a particular home. Companies that have something to gain from an update will likely endorse updating as a given. There is a definite conflict of interest in such advice.
Some companies selling plumbing fixtures, windows, cabinets, and lighting fixtures often publish articles that are native advertising. Native advertising refers to cleverly designed advertisements that appear to be consumer information. You may have unknowingly stumbled onto such a site. These statements are unprovable tactics. An example is an advertisement in a major magazine that features a schedule demonstrating a percentage return on investment when you buy their product. To be clear, not all companies participate in this type of advertising, or do so unwittingly.
The companies that have the most to gain from an update are real estate companies, agents, and iBuyers. They believe using your money to make updates will make the home easy for them to sell. While an updated home may be easier to sell, whether or not it was the wise thing for you to do is not the most straightforward calculation to make. Here is a DearMonty article on how to determine whether or not to update or remodel: DearMonty.com/remodel-or-build-new
Some Buyers Seek Homes to Fix Up
There are many reasons home buyers prefer to buy a home that needs updating. Some examples are the buyers who have experience in the trades and know how sweat equity works. Usually, it will cost them far less to do the seller’s work when they hire contractors. First-time home buyers, investors seeking a rental home, or even home flippers are prime candidates. There are other reasons too numerous to mention here that a buyer would buy a home needing updating.
No Easy Answers
None of these observations suggest not to update your home before you put it up for sale. The goal here is to put the updating task in the proper perspective. Information is power, and you can make better decisions when you have the information you can trust. The location of your home, your reason for selling, and your financial situation are all factors. A positive reason to update that many home sellers do not consider is the tax implications of making specific improvements that you can add to your basis. Here is a link to the source: IRS.gov/pub/irs-pdf/p530.pdf