This week we're going to discuss doing repairs and updates to a home BEFORE it hits the market.
Let's face it, there’s not a lot of space in Los Angeles for new home construction. So... the homes are old. That means we probably need to do a few things... to get the house ready to sell. This all boils down to getting you the most money for your home.
Let’s talk about How the Process Works… Most of the time, when buyers go through an open house, they're looking at the layout, the floors, the view, the driveway, and so on.
Most aren't looking at the electrical outlets, trying all the faucets to see if they work, playing with the air conditioner. When they open escrow, they hire an INSPECTOR to do this... With that in mind, I’ll also say this…
Buyers pay inspectors to find problems. So even in a perfect house, they’ll find something.
There are three types of things you want to keep in mind:
#1 is Repairs
Odds are, a buyer will ask you to repair broken items. This can be anything from a leaky sink to a broken window. You can either have them repaired, or give the Buyers a credit to HAVE them fixed.
In my experience, it’s better to PAY the Buyer than have things repaired later on after everything's said and done... That's because they tend to get picky about repairs and might find problems with the way things were fixed.
We’ll talk more about negotiating repairs in another episode, but for now, just know, it can get mighty expensive if handled incorrectly. But, if it’s ALREADY fixed before they see it, there’s nothing to ask for. It's a moot point.
So get that stuff done before the house even hits the market.
#2 - Improvements
Does the fence need a fresh coat of paint? Door hinges need a little WD-40? You could switch out the light switches and door knobs even though you didn’t really need to Or replace the dying plants with something more lively.
Use your imagination and pay attention to the little details. Like replacing all the light bulbs in your house with the same exact style. At the very least, it'll make your photos look fantastic!
Doing the small improvements like this can really make difference. From a GOOD listing, to a GREAT listing. This isn’t a brand new hairdo. We’re just getting rid of the "split ends".
#3 - Updates
These can be more intensive. Copper pipes, updated electrical panels, things like that. Two ways to think about this:
First, what does your competition look like in your price range? Are they all updated? Will YOU be the only one that ISN'T? Or… will you be the only one that IS updated? Great way to differentiate yourself.
Second, if the Buyer asks for some of these updates, it may cost you more money NOW than it would have before. This is all about getting your house “bulletproof”… and attractive to potential buyers.
When you start to negotiate repairs, Buyers aren’t going to fix most of this stuff you gave them a credit for... but they also don’t want to buy a broken house. This process becomes super emotional for Buyers once they open escrow.
This is ALSO a wake-up call for Sellers…
I’ll cover this in more detail on another episode, but let’s talk about PAYING the Buyer for repairs. Like I said, it’s usually better than DOING repairs YOURSELF once you’re in escrow.
But, I’ve seen Million dollar deals ALMOST fall apart over a thousand dollars in repairs. Why on earth would this happen? I’ll tell you…
Once you open escrow, Sellers start "Doing the Math". They take the Sales price… MINUS the cost of selling… MINUS their mortgage balance… and the REST goes into their pocket.
Every DOLLAR a Buyer asks for after they accept an offer becomes much more tangible. Whereas BEFORE, negotiating a SALES price is much more ABSTRACT, and a thousand bucks isn’t that big a deal.
So Keep that in mind as the Seller: It's not your money until escrow cuts you a check.
Now obviously, there are things I can do as an agent to minimize that cost, but this is a good one: Just Being Proactive. We’ll talk about other techniques on future episodes. But that does it for today.
Tune in next week when we talk about The Pre-Launch Marketing Plan.