Do you think it’s time to IMPROVE your home? People and families change over time. Certain needs and wants evolve. As children grow, often both they and the parents feel a need for separate spaces to watch TV, game or just hang out. That might mean a need for a great room addition or a finished basement. Families also enjoy entertaining friends which often creates a desire for a bigger, nicer kitchen and possibly an inviting outdoor living space. Families expand with additional children or other family members joining them. This might require bedroom additions, a master suite addition or an in-law suite.
Projects like these are tens of thousands of dollars. Larger projects or multiple projects often well exceed one hundred thousand dollars. Now you must enter the following considerations:
- Do we have the cash? Should we liquidate some of our assets? Should we seek a renovation loan?
- Will we be over improving our home and pricing ourselves out of the neighborhood?
- How long do we plan on staying here?
Faced with these questions, one should also consider whether to MOVE instead. That would mean doing all the minor repairs that the house needs and many cosmetic updates so that it will show well when listed for sale. De-cluttering and staging are almost always a suggestion of professional realtors.
While readying to sell your home, you will be seeking for possible homes to purchase that have the size and features that your family needs and desires. The fiscal math is not as simple as sell for “x” and then buy for “y.” Here are other expenses that may need to be factored into your financial equation:
- Real estate fees
- Lawyer fees
- Closing costs
- Professional services such as a home inspector and title insurance
- Moving expenses
- Possible need for new/more furniture and decorating
After that, there are some other unknown variables:
What are the neighbors like?
- Friends for the kids?
When you’re not sure which to do, you should consult with professionals. MOVE or IMPROVE in NJ is compromised of realtors and project designers that work together with families faced with these same options. The process is similar to the HGTV show “Love It or List It” only tailored to the real world where the decision needs to be made up front and not at the end of a major renovation at the end of an episode.
Because of emotional ties and pride, most homeowners believe their home is worth more than it actually is. Knowing this, sadly and unprofessionally, all too many real estate agents prey upon that belief.
The value of a home is what a willing and able buyer is prepared to pay for it. The best way to predict this dollar amount is to research the “comps.” That is the comparable homes that have sold over the past six months in the neighborhood. Plus and minus adjustments do have to be made for different features and conditions. This baseline creates a very good reference as far as how much to list a home for sale. This process is called a Market Analysis.
If priced correctly, a newly listed home in a town’s median home value range should sell within the first 30 days on the market. If there are no offers or just low ones in the first 30-90 days the correct strategy is often to make a price reduction.
Some realtors, on a listing appointment, will suggest that a higher price than proper market analysis will forecast. Homeowners will think that means more money in their pockets when their home sells. So they select this particular realtor with high hopes. Then, after the home doesn’t garner any interest and offers at that price point, the realtor suggests a price drop, most likely down to the correct market price. The once optimistic, unsuspecting homeowner might think that they own lost 30 plus days. In fact, they very well may have lost out to the best buyers in that crucial window of opportunity causing their home to sit much longer than expected, unsold on the market. Through the listing agreement, you will now be obligated to stay with this agent for months, losing both time and money.
A realtor that suggests you drop your home’s listing price by $30,000 may only be losing out $500 +/- in commission while you are losing thousands. But as this article suggests, an over-inflated home listing price merely gives owners hopes of extra money in their pocket. The reality is that it can cause a greater loss of time and money over and above the difference of the zealous listing amount and the correct marketing listing.
Be smart. Do your homework. Work with a professional realtor that has a proven track record that they can easily illustrate to you. Hire someone that you trust and feel comfortable with knowing they will have your family’s best interest first and foremost.