After last week’s article on how to evaluate all the decisions involved in getting the exterior of your home ready to sell this week we look at how to make decisions on what needs to be done in getting your home ready to sell from the inside using my home as an example. Should you paint? Should you make repairs? Should you finish your basement?
Getting your home ready to sell- the decision process
The formula for deciding what needs to be done inside your home is pretty much the same as the formula for figuring out what to do outside your home. If the benefits are greater then the costs then go for it. If the costs are high with relatively little value added, then your just going to have to let this one go.
When evaluating the costs think of both the money it will cost you as well as the time. For example, repainting your whole house may not cost a tremendous amount, but it takes an enormous amount of your free time. So don’t just count the cost of the paint and brushes, but also evaluate whether it is worth it to keep your house off the market for a couple of weeks while you get everything painted.
Next, you have to consider how much the project improves your home. Can you get more money from your house with this improvement? Would it be hard to get someone to buy your house without making this fix/improvement? How much easier it will be to sell your home or how much more your house could be sold for is what we will call the benefit.
If the benefits are greater than the costs you do the project. That makes sense, now let’s look at the decisions I made in trying to get my house sold.
Finish the basement
I need to explain this one a little bit. My basement is about 1/2 finished and 1/2 unfinished. A while back I decided to have an additional room finished so I fired a drywall guy. Since we were having a drywall guy come in anyway we figured we might as well have him redo the drywall in the downstairs bathroom, since it really wasn’t done very well in the first place.
Unfortunately, our drywall guy was thrown in jail in the middle of the project leaving everything 1/2 done. To make matters worse, I paid the guy up front. Ugg. That was stupid. I don’t have the skills to complete the job myself so I am going to have to hire someone to do it for me if I want this project done.
Costs: Very high. I got several quotes and all the contractors agreed the first guy I hired did a lousy job and everything was going to have to be torn down and done over. To drywall 2 rooms and tile 1 rooms floor is going to cost me about $4,000. Ouch!
Benefits: Very high. As tough as it is to give away $4,000 on a house I will be moving out of soon, the benefits might just be higher than the costs. For one thing, These 2 rooms look lousy and are the only major problem in an otherwise very nice house. With these 2 rooms done my home seems like a premium home. With these 2 rooms torn up, I think buyers would look at the home in a completely different light.
When deciding if you should finish your basement or part of your basement you should also consider that finished square footage is one of the major metrics buyers look at when evaluating the value of a home. For example, my home is about 2,050 square feet of finished space not counting these 2 rooms. Since I want to sell my home for $214,000 that means the price of my home is about $104/ square foot.
By finishing these 2 rooms I add 150 square feet of finished space for only $4,000 or about $27/ square foot. So it is hard to part ways with that much money, but when you look at it on a cost per square foot bases it doesn’t look so bad.
Decision: Yes, I am going to pay the $4,000 to finish these 2 rooms. The psychological boost of fixing the only major problem combined with the value of 150 extra square foot is just too much to pass up.
Several years back one of my kids locked a door in the basement from the outside with the keys locked inside. I had no choice but to kick the door in. The door was still usable afterwards, but had a huge crack in it. The door was still functional, and I am a bit of a procrastinator so we just left it like it was and never got around to replacing it.
Costs: Low. $50 and a couple hours of my time. No big deal.
Benefits: Medium. Once again although the door is still functional getting this kind of obvious damage fixed just makes the whole house seem nicer.
Decision: Yes, I am going to fix the door.
I own a rental home and the first thing we learned was how much paint color matters. My wife likes bright colors and paints every room a different color so our home is full of yellows, purples, teals, and several shades of blue. We think it looks nice, but we initially had a little trouble getting somebody to sign a lease on our rental.
Everything we read said to paint a nice neutral color like tan or off white. We have it a try and painted all the rooms in our rental a nice light tan. Boom! Our old house got rented out immediately and we haven’t had any trouble finding a tenant ever since.
So what about the house we are trying to sell? It doesn’t really need another coat of paint, but maybe the neutral colors would make it sell faster?
Costs: High. Paint for a 2,200 square foot home is going set us back a few hundred bucks, and this is a major project involving lots of time and work. Doing this is going to set back the date our home goes on the market.
Benefits: Low. Since the paint isn’t really in bad shape this isn’t going to raise the price one bit. It might make the home sell faster since nobody will be put off by the bright colors, but we aren’t really worried about our house selling slowly.
Decision: No, we aren’t going to repaint. We will make sure we paint our newly finished basement rooms in nuetral colors, but the rest of the house stays the color it already is.
Replacing the carpet
Our carpet is warn in places, and in other places you can find a drop or two of paint from where my wife dripped a little while painting the walls all the pretty colors discussed above. In several rooms, the carpet isn’t well stretched out, and a ridge of carpet has risen in a line across the middle of the room. Maybe we should replace it throughout the house?
Costs: High. I am going to estimate we have about 1,000 square feet of carpeting and new carpet will run me $4-$5 per square foot installed. That is a cool $4,000-$5,000. Damn it, I can’t afford all these big projects. I sure hope the benefits come out as low.
Benefits: Medium. The carpet is in OK shape, and the showy areas of the house are tile, so I don’t think new carpet is going to have a huge impact on the value of my home.
Decision: No, I am going to let my slightly flawed carpet lay.
A cheaper option: Having the carpet professionally cleaned
Since I am not going to replace the carpet having the carpet professionally cleaned is another option.
Costs: Low. I got a couple of quotes and found someone who would do the job for $150.
Benefits: Medium. After getting the carpets cleaned, they look much better. In some places the carpet looks new and almost all of the stains are gone.
Decision: Yes, getting the carpet cleaned was a good choice here.
Re-stretching the carpet
OK, so I am keeping my carpet, but I can still make it look nicer by fixing those ridges I spoke about above. Any good carpet installer and re-stretch the carpet to make it look nice and flat.
Costs: Low. It is going to cost me $75 per room. In two rooms the carpet has a ridge so high you could trip over it if your not careful, then in another two rooms it is much less noticeable.
Benefits: Medium. This is one of those highly noticeable flaws that just make the whole house seem less than perfect.
Decision: Yes. I had the carpet re-streched in 2 rooms for $150. The other 2 rooms weren’t nearly as noticeable, so I let those go.
Replacing the refrigerator
I had a little bad luck fall our way, and our refrigerator broke down just days before our house went on the market. What bad timing, just a few weeks later and it would have been somebody else’s problem. Obviously we had to replace it, but the costs could very from $50 to $2,000.
I know this isn’t a problem most of you are going to find yourself with when selling your home, but I like this example because it shows how every situation is unique and how the cost/benefit formula can be applied to an unusual situation. Here is how we decided what to do:
Refrigerator option 1- Cheap used refrigerator
Costs: Low. A working fridge can be found for as little as $50 on Craigslist. This is the option I might normally go for if I wasn’t selling my home, but…
Benefits: Low, so low they are negative. A lousy looking refrigerator will make the whole kitchen look lousy, so this option is a non starter.
Refrigerator option 2- Get a new fridge
Costs: High. Style rather than functionality is what I care about here. A nice new fancy looking fridge will cost a minimum of $1,000.
Benefits: High. A fancy looking fridge will make the whole kitchen look nicer.
Refrigerator option 3- Get a more expensive used fridge that is pretty
Costs: Medium. I looked on Craigslist again and a good used refrigerator can cost anywhere from $200- $800.
Benefits: High. We found the perfect fridge for us. It was black to match the rest of our kitchen, and it looked new and shiny on the outside. I strongly dislike the fridge itself. There is no ice/water in the door which is my favorite fridge feature, and the shelves inside the fridge are poorly designed so no shelf can be set high enough to fit the 10 pound jugs of salsa I like to get from Sam’s.
That doesn’t matter though. This fridge will make for a pretty picture of our kitchen and will work well enough to keep our food cold for a few months until we move. I am being shallow here, so it is what on the outside that counts.
Decision: We went with the $200 pretty used fridge.
The ABC’s complete guide to real estate and moving
This article is one of a series of articles about all the decisions involved in moving, selling a house, and buying a new one. The ABC’s complete guide to real estate and moving can be found here.