| In my experience,
buyers buy a home for aesthetic reasons first, and then they will back up their emotional
decision with logical reasons. Here's a
brief "Wish List" of what buyers generally look for in a home.
1. Quiet, peaceful, no-traffic neighborhood.
2. Nice views, especially water views.
3. A modern kitchen with light colored cabinets and tile/granite countertops.
4. Interior of home should be light & bright.
5. Appliances and mechanical/electrical systems should be up-to-date.
6. Roof that will be trouble-free for the foreseeable future.
7. Polished hardwood floors, ceramic tile, or new/newer carpeting.
8. Well-maintained and attractive landscaping.
9. Usable outdoor living spaces such as decks and patio (preferably some private areas)
10. General emotional/intuitive feel of the property and surrounding area/neighborhood.
Obviously, the more of the above features that a property
has, the easier it is to market and sell the home. Generally, buyers will not pay the top
of the market price or in the upper price range of the properties selling in the
area/neighborhood if the property lacks many of the above features or if the property
lacks the specific features that they are looking for in a home.
Buyers will discount the offering price of a home in order
to bring it up to the aesthetic standard that they want. Buyers have a tendency to
"horrible-ize" (you will not find this word in the dictionary) both the features
and price it will cost to bring the property up to standard (their standards, of course).
Therefore, this leaves you, the seller, two options, if you want to sell your property:
1. Fix the obvious features that are lacking
and obtain the best bids before the buyer sees the property and then, sell the property to
the buyer. This option generally will net you more money.
2. Adjust the price of the property to
reflect the need for upgrading the property to the "Generally Accepted Standards of
Most Buyers" (The Wish List). This option generally will net you less money because
the buyers have a natural tendency to "horrible-ize" how much it will cost to
get the work done and most buyers cannot "mentally" move-in to a house that
doesn't have the features already in place. It is easier for a buyer to keep looking for
another property rather than risk underestimating the costs to bring the property up to
their standard.
3. Many sellers think that there is a third
option, which sounds like this: "According to my own personal standards as the
seller, I think the kitchen is just fine with its Formica countertops, and the shag burnt
orange carpeting is okay as long as it's cleaned. If the buyer wants, maybe I'll credit
them some money to clean it."
The problem with this option is that it takes longer to
market the property because the house is a "re-do" in all buyers' minds.
Ultimately, the price the buyers offer (if they make an offer) will reflect what they
think needs to be done and how much they think it will cost to do it.
For example a seller might think that it costs $10,000 to
remodel a kitchen; a buyer will think it costs $30,000; and the reality may be $20,000.
Naturally, a buyer will use their own estimates when deciding whether they will make an
offer and how much money will be offered. In this example, the difference in the buyer's
and seller's estimates would be $10,000 just for the kitchen remodel alone. This assumes
that both the buyers and sellers can agree to meet somewhere in the middle.
The reason I am taking the time to explain this entire
process is to be sure that you, as the sellers, understand how buyers make their first
emotional decision to buy a house.
Essentially, they make a Wish List and compare each home
they see to their Wish List. Then, if they like most of what they see, they make price
adjustments (discount the asking price based on their price estimates) for the items
missing from their Wish List.
You will net more money if you do the upgrades yourself.
This is true because whoever gets to do the work to bring the property up to standard is
entitled to what I call the "work contingency effort/risk monetary factor". In
short, whoever (the buyer or seller) does the work is entitled to receive the monetary
benefits or gains that come with getting lower bids and/or taking on the risk to complete
the desired work.
On the other hand, it is possible for you to "over
improve" your property. For example, I've seen homes where the sellers have put
top-of-the-line improvements into a home in a middle-class neighborhood. Unfortunately,
the sellers cannot get that money back, because the improvements are out of character with
surrounding homes.
In most buyers' minds, they expect things to be done right
and in good working order when they make their initial offer. If some things have been
"over improved", this will provide the logical reasons they need to move forward
in buying the property. However, "extras" that you've added for your own sense
of comfort or security will not generally add much to the market value of the property. It
will help the house to sell faster, but the neighborhood sets a "ceiling" price
for your house, no matter how much better it is than your neighbors. |
