A New Trend in Homebuying... 
Is Condition Becoming More Important than Location?
The real estate mantra of Location, Location, Location still holds true and we believe always will. But we have seen a trend lately with homebuyers which tells us that condition is becoming increasingly important to buyers. Homes that need updating and repairs are sitting on the market longer and selling at far greater discounts than comparable homes in better condition. The disparity seems greater than ever.
And sadly, more homes seem to need significant updating and repairs.
When you consider the economy, many people have less discretionary income as the cost of everything has soared. Plus it seems like more homes on the market have condition issues brought on by deferred maintenance and lack of consumer confidence. Many people don't have the money to spend on maintaining their homes, and others who do have the money may hesitate to spend it.
Buyers have become increasingly sensitive to the cost of everything these days and know that making major repairs and renovations to a home can cost a small fortune. Saavy buyers know that sellers do not recoup the full cost of improvements made during their ownership (who hasn't scanned a Cost vs. Value report?). Buyers want the home they buy to be move-in ready and nicely updated, so they don't have to do it themselves.
BUT, for many people, a home is their single largest investment. Do not neglect it. Homeowners are wise to keep up with the maintenance on their home. Fix problems while they are small and before they become bigger and more costly.
PLUS, many buyers today are using FHA, VA and USDA financing in which the appraisers for the mortgage company will require certain repairs to be completed prior to settlement. For example, peeling exterior paint must be scraped and painted for FHA loans. Peeling paint looks terrible and will cause a buyer to offer less for a house. Keeping up with those repairs will allow a seller to get more for their house.
We had this exact situation recently where a seller was complaining that he would have listed and sold the house for more money if he knew he had to do the exterior painting work required by our buyer's mortgage company. (Didn't your list agent tell you that was a likely outcome?)
We understand, home improvements are expensive. Can you believe?
Painting by professional painters seems to run about $800 - $1,000 per room. Even for the do-it-yourselfers, with a gallon of Benjamin Moore paint costing $55, it could be a couple hundred bucks just for the materials to paint one room.
It seems like you can't get an electrician or a plumber to set foot in your house without dropping $100 - $150 minimum for the service call.
One bag of Scott's Turf Builder costs $40. Reseeding a whole yard can cost a couple hundred dollars in materials and if you don't do it properly, all that money could get washed away - literally.
One levered interior door handle set costs $80; when you replace all the knobs in a home, you could be looking at a dozen or so handles. ($1,000 for door handles?)
A handyman will charge $4,000 - $5,000 to relocate a laundry room to a 2nd floor hallway closet.
Our advice:
Keep things simple. Landscaping should be simple enough to avoid the overgrown look and managed to keep roots from uplifting sidewalks or foundation. Select maintenance free materials when doing home repairs/improvements.
Take good care of what you have. Keep your home clean and polished, especially carpets, wood floors, kitchen cabinets, and bathroom tiles. Protect high traffic/use areas from stains and damage. Keep up with exterior caulking around windows and interior caulking in bathrooms. Change the filters on your HVAC system and have the systems serviced annually.
Buy quality. Quality materials are worth the money; they look good and perform well for years down the road.
Know your limitations. Anything that you can do yourself is great. But, hire professionals for improvements/repairs that are beyond your capabilities. Nothing is worse than poor craftsmanship and finishing work from an obvious DIY job.
Contact Scott Loper, Associate Broker, Realtor®, RE/MAX Realty Group at 215-513-1333 for help buying or selling a home in Lansdale, Harleysville, Hatfield, Souderton, Skippack, Collegeville, North Wales and the surrounding areas of Montgomery County of Pennsylvania. To Search for Homes For Sale in Montgomery County Click Here.
Homeowners: Fix It NOW! Deferred Maintenance will COST You When You are Ready to Sell - Copyright © 2011, The Scott Loper Team, All rights reserved.
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35 Comments on Homeowners: Fix It NOW! Deferred Maintenance will COST You When You are Ready to Sell
So many people let their homes go, it's sad. Even houses that are under 5 years old can seem run-down. I did an arbitration the other day where the home owner is in the home construction business and turned in an estimate of about $50k in updates and repairs needed. He does it for a living!!
I agree... great advice. There's already so much to do when selling, why add piled up repairs on top of all that?
Gretchen
Great advice.. It is sad when you see a home that is deteriorating. Sometimes, it can't be help, but is home go down hill quickly when they aren't maintained.
This is great information and so very true. Buyers tend to over estimate how much it will cost to fix things and deduct, deduct, deduct! Thanks Loper Team!
Great post! I think people often don't realize how important it is to maintain their home and what it could cost them in the future. Thanks for sharing.
I was telling a buyer this week - normally I would say, Location Location Location...now it is CONDITION, PRICE, AMENITIES. Our locations are good overall...but condition is becoming king here. It is just too expensive to do it all before you sell. Even if you can afford to open your pursestrings and pay for everything, it is just too painful for the average seller to part with all the funds at once.
Part of the home strategy should be to set aside money every month for unexpected repairs. Unfortunately, this does not happen.
Appraisers and/or Inspectors may list "Required Repairs" as a condition of getting the New Loan.
If neither the Seller nor the Buyer has the money for said Repairs, the Deal is Dead.
Sellers, you MUST keep your house maintained, in order to avoid a Failure to Close.
Hi--great post. I spend so much time during home staging consultations talking to clients about taking care of deferred maintenance. Buyers seem to want homes that are in move-in condition and not a long list of "to-do's" and I can't figure out why sellers haven't gotten that message.
The people who are looking for homes that need work are most often looking for homes for fifty cents on the dollar! ( looking for a bargain)
Excellent post! Sellers have to have their homes in top condition these days--because there is so much to choose from and because buyers don't want to have to repair or renovate (or so it seems). Sellers should start to look at their homes long before they decide to put it on the market.
Great post! In today's market with lots of other properties available, there's no reason why a buyer should risk buying a home in need of obvious maintenance, unless the price is so low that it makes it worth while.
Great post! I always recommend that my sellers get an inspection done before selling. That way they can see the things that are going to pop up and have a chance to fix them before we list. While some updating and fixing may be small and inexpensive, others may be costly and you can price your home accordingly if it can't be done beforehand.
There is so much competition, you have to make sure you home stands out in some way!
This is a great post and I hope lots of people read it. I love when people like Shelly get a sellers inspection. This is the way to go. I have heard on average a buyer wants 4k off the sale price for every 1k of repairs found. By getting a sellers inspection the people know what they are buying and don't need to ever submit an offer if they feel the price is not right. Homeowners should also remember that they can have a home inspection at anytime, it doesn't need to be for a real estate transaction. Remax recommends hiring a home inspector like myself that belongs to an association like InterNACHI.
Home depot and others are in trouble because people are not investing money into their homes especially if the banks are taking them over. Your post thinking is sound and in a normal market, making repairs is the way to go..no question about it
Good information and advice. It is so easy to let the maintenance of a home be a little forgotten such as needing to repaint rooms and woodwork, doors and the like. It is much easier to do it in stages if you are able. Personally I have never hired a painter to do interior painting as I had become quite good at in many years ago. However, lots of other maintenance items if it cannot be done by either myself or my husband we do hire it done. I am talking maintenance and not remodeling though.
I was going to suggest this for a Feature, but, congrats...it already is! The best way to end up with little improvement needed at time of sale is to maintain while you live in the house! Letting things go always ends up costing more in the long run!
Thanks for all the great comments and feedback. I think we are all on the same page. It is just a bad idea to hold off on fixing things. Unfortunately, if money is tight, it is easy to let things go.
Lisa
Very good information shared. Thank you for that. I learned through both personal home ownership, investment properties, and business as a real estate agent that EVERYONE pays to maintain their home...the question is only do you pay for it while you live in it...or do you pay for it when you are trying to sell it?
Hi Ken,
Yep, you nailed it! Thanks for stpping by.
Lisa