13 Jan Q: Should I renovate my home to sell?
The goal is to enhance the look of your home to maximize the sale price, but don’t spend money on large renovations where you won’t get your money back. This decision is easier said than done, as many sellers ask us questions such as “Should we renovate the bathroom or the kitchen before we list?” Many sellers even say to us, “We know the buyer will want to make it their own, so isn’t it a waste to renovate, if the buyer will want to renovate on their own anyway?”
My answer to this question is that people generally offer less for an apartment when they think it needs a renovation than when they expect to renovate because the style is not exactly theirs. So for example, if a bathroom is in terrible condition and every buyer comments about how they “have to renovate it” and that “it needs a gut,” then it is definitely worthwhile to explore the cost of renovating it.
If you can renovate the bathroom so that people don’t point it out as a problem spot, and the cost and time it takes to complete the renovation are not too great, then go for it. However, keep in mind that this is a bet you are making. By the time you are done with the renovation, the market may be in a different position, there might be a similar apartment to yours on the market asking less than you want to ask, or your building might all of the sudden increase the maintenance, or change a subletting policy. Every situation needs to be evaluated based on its risk and its reward.
You will also want to consider the trajectory of the market. In a rising market, delaying a sale might be fine, as it might be worth more in the long run. But in a flat or declining market, delaying a sale might mean that you can’t recoup your renovation investment. Another item to consider is the amount of inventory now on the market. In a market with limited inventory, buyers care less about the quality of a renovation, as they are simply trying to secure any apartment that meets their needs. They can’t be picky or they will have to wait a long time to get a place.