More sellers are remodeling properties to avoid cutting prices, though some projects pay off more than others
PHOTO ILLUSTRATION BY SAM KELLY/THE WALL STREET JOURNAL
The playbook for selling a home needs a makeover, and often so do the houses.
Selling a house takes much more elbow grease than it did a year ago. Homeowners earlier could expect a bidding war the moment they staked the for-sale sign in the front yard, even if the property was in dire need of updating.
With mortgage rates now pushing 7%, buyers are harder to come by and easier to turn off, real-estate agents say. Making repairs or even small cosmetic improvements that buyers care about could make the difference between getting your asking price or giving a discount.
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Between mid-July and mid-August, about 95% of home sellers made updates or repairs before listing their properties, up from 71% of sellers six to 12 months ago, according to Realtor.com. They spent an average of $14,163.
Not all renovations are worth the cost for sellers, data suggest. The top three interior remodeling projects with the highest return on investment are a hardwood-flooring refinish, new wood flooring and an insulation upgrade, according to a recent National Association of Realtors report.
Some sellers might find that smaller fixes such as a fresh paint job can make a bigger impression on buyers than pricier changes such as a renovated third bathroom, real-estate agents said.
“Sometimes, the upgrades that aren’t the sexiest pay off the most,” said Judy Dutton, executive editor at Realtor.com.
A big remodeling project, such as a new kitchen or deck, might not be worth the investment and delay a seller’s timeline, given supply and labor shortages, said Jessica Lautz, a vice president at NAR. Focus on more affordable projects that appeal to buyers and look beautiful in photos, such as refinishing hardwood floors, she said.
A hardwood-flooring refinish has a 147% cost recovery, meaning homeowners are likely to recoup well more than the cost, said Ms. Lautz. For comparison, a kitchen upgrade has a 67% cost recovery.
Consider the smaller things that are likely to turn buyers off and fix them fast. Mitigating strong odors is a relatively low-cost fix that helps sell a home, said Mark Barnes, a Realtor in Charleston, S.C.
Mr. Barnes got one client’s home a deep cleaning before showing it to potential buyers, because the scent of the owner’s dog overpowered the house. The owner paid about $400 for the service, which included two carpet cleanings. The house sold for $475,000, about 5% over the list price, Mr. Barnes said. A deep cleaning could add $3,731 to the sale of a home, according to a recent report by HomeLight, a marketplace that connects home sellers with real-estate agents.
Enhancing curb appeal helps a home stand out to buyers and reduces seller concessions, said Darin Eppich, a Realtor in Los Angeles.
Mr. Eppich recommended his client David Garonzik resod the front lawn of a three-bedroom Woodland Hills, Calif., home as an improvement from the lawn that was dying from the drought. Mr. Garonzik considered putting in a desert landscape with rocks, but Mr. Eppich didn’t think the roughly $10,000 cost would be worth it or would seem as appealing to buyers.
Mr. Garonzik is hoping the $4,000 improvement will help him land more than the home’s $1 million asking price, though it is too soon to know whether the gambit worked. For apartment sellers, focus on cosmetic upgrades—unless there is an apparent flaw such as a leaky faucet or nonworking appliances, said Renée Lee, a real-estate agent in New York City.
Anything that isn’t broken, is costly to replace and isn’t overtly visible, such as a new central air-conditioning system, won’t impress buyers as much as improvements they can see, such as new doors for the kitchen cabinets or customizable closet shelves, she said. Aim to fix anything that an inspection would turn up, real-estate agents said.
Rising material costs are one reason to be judicious with the projects you choose. Utility is another.
Cindy Scholz said one of her clients wasted more than $1,000 repainting his home’s garage floor and rewallpapering the inside of closets.
“Don’t fixate on items that don’t matter,” said Ms. Scholz, a Realtor in East Hampton, N.Y.