Uncategorized June 2, 2011

Cost v. Value

I’m often asked about what pre-listing repairs and upgrades are likely to make financial sense for sellers. Generally, I think the best money spent is in presenting what is already there in the best light. A thinning of personal items, minor repairs like painting and tightening, a thorough cleaning (inside and out; especially at the front door), and staging (inside and out) typically offer the best return on investment. Larger, more cash-intensive projects are certainly more risky. The new buyers may not like the choices made, and will be reluctant to pay for something new and not to their taste. They’ll often have fears that they are over-paying for a “flip” so the money spent can actually hurt the equation for the seller. And, no matter what, we know that cash spent for repairs adds to cost basis. So, to account for the risk premium, I think that Sellers should have a high degree of confidence that major repairs done in an effort to sell will return somewhere upwards of 110% of cost.