NEW YORK (MainStreet) When lenders are stingy and buyers picky, a seller wants to make sure the home is appealing. So obviously you want to fix all flaws before going to market, right?
Maybe, but not necessarily. The calculation is tricky. Not only does it involve the repairs' actual cost, but the buyers' sometimes incorrect perceptions about what those improvements are worth.
Many studies show that home improvements by contractors typically don't add as much resale value as they cost, supporting the case for tidying and painting before a sale, but not remodeling the kitchen unless you have the skill to do it cheaply yourself. But these findings don't necessarily apply in an individual case. If you can get a particularly good deal on an improvement, it may well pay to hire a pro to do it.
A seller who must have a quick sale might be wise to lay out serious money to put the home in tip-top condition. Even if the improvements won't pay for themselves completely in a higher sales price, that gap could be closed by saving months of payments on the mortgage, taxes, insurance and maintenance.
When time is not that critical, the seller should do a careful cost/benefit analysis. Hire an appraiser to find out how much value the improvements would add and get a second opinion from a real estate agent who works full time, has been in the business a long time and knows the neighborhood well.
Keep in mind that agents, because they earn a percentage of the sales price, may push for improvements that raise the price even if the improvements' cost reduces the seller's profit. Also, agents generally prefer quick sales, which allow them to move on to the next property.