Maximizing Profits When Selling Your Mountain Home in a Buyer's Market
in Blowing Rock and Boone NC.
As a seller in a buyer's market, you want to sell your house for the highest price possible with the least amount of investment. You want to maximize your profits, profits that you invest in a new home.
In a buyer's market, the homes for sale are plentiful and prices are low. You, as a seller, can't convince a buyer he should pay $15,000 over market value simply because you installed a new roof or added granite countertops and marble flooring to your kitchen.
Your asking price needs to align with the market value of the neighborhood at the time you are selling your home.
Assume the average market value of your area is $275,000. You paid $200,000 for your home five years ago.
Assuming you put %20 down and you have approximately $160,000 left on your mortgage.
$275,000 - $160,000 = $115,000.
Out of that $115,000, you will need to pay any realtor fees and closing costs, and any liens you have against the property. You also have the day-to-day cost of living in the home until you move. Assume you have a potential profit of about $95,000.
Your "get the house ready to sell" budget comes from that $95,000. Because you are selling your home in a buyers market, you need to attract buyers through price as well as amenities. And that means remaining comparable to recent home sales in the area. If a home similar to yours recently sold for $279,500, any improvements you make would be to make your home comparable and so salable at $279,500.
First, you stage your home, which is a repair and replace plan of action.
This includes such things as painting walls, removing all clutter and extra furniture to storage, and improving your exterior for curb appeal. You repair or replace damaged moldings, window screens, loose tiles, etc. You replace cabinetry hardware, faucets, and outdated lighting fixtures.
Essentially, you supercharge the aesthetic of your home.
Doing this type of repair and replace does not raise the value of the property above market value; it makes the property presentable for sale. Very little investment is required. And if your home is structurally sound and the infrastructure up to code, this may be all you need do to maximize your profits.
How do you know if your home is structurally sound and the infrastructure up to code? One of the best investments you can make before putting your house on the market is to obtain a home inspection.
An inspection can cost anywhere from $200 to $500 on average. The inspector will assess your home from the foundation up, all the way to the roof. Should something be faulty or in need of repair, something that could cost you a sale, invest your money and get it fixed.
An inspection can be an important tool in determining where to invest your money in a home you are selling. It can also be an excellent marketing tool when you do put your house on the market. Should your house prove sound, a potential buyer may be less wary, and more likely to make an offer.
A staged home may look great, but ultimately a serious buyer will want an inspection. If you've painted over that water stain but didn't fix the leak that caused it, the inspection in all likelihood will unearth that issue, leaving you at a disadvantage.
Any large expenditure should be used to correct any problems, problems with heating and cooling, electrical, plumbing, the foundation, and the roof. No amount of beige paint and fresh gardenias will help if the buyer finds you have a leaky roof.
Suppose, though, that your home proves sound, but that house that sold for $279,500 had upgrades your home lacks. The carpet in your home is five years old. The recently sold home has newly installed hardwood floors. Your kitchen countertops are Formica. The competition offered granite countertops.
Do you invest in hardwood floors and granite countertops to reach that $279,500 asking price?
That kind of investment could run as much as $25,000. How do you determine if the investment will prove profitable?
Realistically, it won't. You're investing $25,000 to get $25,000 back. You're also investing time, which in a buyer's market comes at a premium. While you're waiting for materials to come in and installers to install, another comparable home has sold only for $275,700.
You just lost a little more on your investment, and have extended the time needed to get your home on the market.
Another approach may be to list your home below the average market value without further investment. The first home sold for $279,500. You list your home for $269,900.
The difference between the market value of $275,000, the number you used to estimate your profit, and $269,900 is $5,100. Compare a $5,100 reduction in estimated profit to a $25,000 investment.
At $269,900, you'll attract buyers. With a home inspection to show the house is sound, and your minor improvements, your house has a better chance of attracting serious buyers.
The difference between improvements and upgrades plays an important role in determining where to invest your dollars before putting your house on the market. Improvements maintain a home's value. They keep the home within range of market value as well as lending appraisal values.
Upgrades do add value, but the return at time of sale is your concern as a seller. In a buyer's market, it's far more difficult to get a dollar for dollar return on upgrades.
You're more likely to get a better return on the profits you invest in a new home. And that makes you the buyer in a buyer's market.
If you have question about this article or about real estate in either in Blowing Rock, Boone, Valle Crucis, Banner Elk, Seven Devils, Deep Gap or Ashe County, please give one of our professional Realtors a call today.
Ace Realty in Blowing Rock can help you with all your Blowing Rock area real estate needs. We can be reached at (828) 295-6165.