Both market conditions and your home's condition dictate what additional projects you should complete before you open your home to prospective buyers.
Seller's MarketLeave most improvements for the buyer: In a seller's market, the rule of thumb is to leave most home improvements to the buyer. You probably won’t increase your sales price enough to cover the cost of the work and time, and second-guessing what the buyer will want in appliances, decor and finishes could cost you the sale.
Reduce your asking price so it reflects your older kitchen or bathroom instead of squandering time and money on a major remodeling job that people might hate.
Disclose any work done without a required permit: One exception to the above rule of thumb, however, is righting a wrong. That is, if you or a previous owner completed work on your home without a required permit, make it right before you attempt to sell: either
- disclose that you did not obtain a permit,
- or obtain a permit and either complete the work yourself,
- or leave it up to the buyer to complete the work in the way they desire.
Ultimately, you could be required to have the local building officials inspect the work in order to obtain a permit. Before you get a permit you also may have to complete any unfinished work. In any case, if the work isn't to code, you could be forced to tear it out, especially if it's a safety hazard.
But that's not the worst of it. If, after close of escrow, the buyer discovers work completed without a permit and the local building department decides not to approve the work, a chunk of the home's value could become a legal issue. Any difference in value based on what was not permitted at the time of sale, becomes a point of litigation.
What to improve: All sellers should perform deferred maintenance repairs to fix or replace broken items and systems. Put the home and its components in good working order by replacing missing roof shingles and broken or cracked windows. Repair driveway cracks and straighten listing fences. Make sure doors, gates, lights, plumbing fixtures and other items are all working properly.
Buyer's MarketMake sufficient improvements to get a market edge: In a buyer's market, along with making certain your home and its components are all up to code, the idea is to give your home a marketing edge – without over doing it.
The improvements you should make aren't necessarily those that give you a return on your money. Instead, they should be largely generic, cosmetic improvements that enhance your home's functionality, efficiency and aesthetics – all to give it a contemporary feel.
What to improve: Often that simply means cleaning up and removing clutter. A new coat of paint, new carpeting, freshly manicured landscaping, updated fixtures, windows, doors and other touches will put your home in the best light.
Let the buyer take care of major fixes: If an inspection or appraisal turns up the need for major corrective work, say due to termite or moisture damage, leave money in escrow with instructions for the escrow officers to pay the contractors once they complete the work.
Let the buyer select the contractors based on several fair bids and have the work done after the close of escrow to avoid a construction zone in your home while you are trying to sell it.
If the buyer supervises the work, you won't incur liability for it and the lender knows the property will be restored to its proper condition, which enhances its loan value.