Should Homeowners Conduct Repairs Before Listing in 2024?
Real estate agents, homeowners and buyers alike recognize the value of making cosmetic changes to a home before selling. A kitchen update or master suite remodel can up the sale price significantly when done well. Conversely, other types of renovations are unlikely to recoup the money spent on upgrades. The only types of alteration truly necessary when selling -- whether the market is in boom or bust -- are functional repairs. While cosmetic alterations are optional, functional repairs before selling are often a must -- especially if they might cause the home to fail inspections or endanger the new homeowners. Follow below to learn why realtors should encourage sellers to make certain repairs before listing their homes.
Understanding the Market in 2024
Sellers Are losing their Advantage
During the COVID-19 pandemic, American culture transformed before our very eyes. Millions of workers transitioned from collaborative office space environments to remote work at home. Families were forced indoors for months at a time, unable to visit with friends or travel to visit relatives in person. As a consequence of this health crisis, American residents restructured their priorities. Many moved out of dense urban areas with high-cost rentals and scarce housing availability in favor of suburbs and rural areas. At the same time, the Federal Reserve slashed interest rates, suddenly making mortgages the most attractive they had been in decades. Because of this, competition for homes around the country was wild in 2020 through the end of 2022. Ever since the federal rate hike, the market has taken a turn.
According to Rocket mortgage article on “2023 Fed Rate Hike Impact On Mortgages, Home Buying And More” both buyers and sellers are at a major disadvantage right now. While prices are starting to come down from record highs, homeowners aren’t willing to take a loss on what looked like a perfect market just a year ago.
Slowing Employment and Increasing listings in 2024
Because of such high interest rates, many have chosen to keep their house off the market. However, economists and researchers do not expect interest rates to come down anytime soon. While a recession-style crash is not expected, many anticipate a prolonged interest rate will result in sellers giving in and finally listing their houses in 2024.
Furthermore -- writes Jacob Passy in his article “Is the U.S. housing market heading for a crash? Here’s what the experts say” for Market Watch, the economy is still changing. Quoting Suzanne Mistretta, Passy writes that “‘slowing employment recovery and still-high unemployment levels are not supportive of long-term sustainable price growth’” in the housing market.
Why Realtors Should Urge Homeowners to Get a Pre-Listing Inspection
Because economists expect the housing market to continue to slow down over the next few months, condition for homeowners is unlikely to improve anytime soon. This means that competition will increase and as the number of listings increases, prices are likely to drop. As such, homeowners looking to sell will have to market their homes as best they can. They will likely avoid investing in cosmetic renovations, undertake updates, or hire a great staging company. One of the best ways for homeowners to prepare for listing their homes on the market is to get a preliminary inspection by a professional to understand what is truly needed for the sale.
What a Preliminary Inspection Can Do For Your Home
In her article “Doing This One Thing Before Putting Your Home on the Market Can Help Sell It Faster” for Realtor.com, Wendy Helfenbaum explains why having your home inspected before you list is worth your while. Helfenbaum writes that “most sellers don’t get their homes inspected before listing them, because the buyer usually orders an inspection during escrow.” However, “if you’re willing to invest the time and money, a thorough inspection before listing your property can make it easier to price your home, manage repairs, and even help sell it faster—and for more money.”
Wendy Helfenbaum notes that paying for an inspection ahead of listing can alert you to issues “if you’ve neglected home maintenance” over the years. Plus, repairs and renovations made before a sale are deductible! Homeowners who fully understand the state of their home also “won’t have to scramble to fix things at the last minute” and have better leverage to “minimize back-and-forth negotiation.”
5 Reasons Why You Should Fix Repairs Before Selling
A pre-listing inspection might dredge up a few safety and condition issues -- whether the homeowner knew about them, suspected or had no clue. Though some issues can be disregarded and passed on to the buyer, others are better resolved before listing the home. When dealing with safety, health or structural issues that could deplete the home’s value if ignored, realtors should encourage their clients to fix before listing. Similarly, if a small, easy to fix issue pops up, realtors might suggest their client fix that too. Some small fixes -- like a new coat of paint or improved landscaping -- can have big payouts when it comes time to sell the home. Below, find five reasons sellers should pay for repairs before listing.
#1 The Homeowner Will Probably Have to Pay After Inspection Anyway
As mentioned above, a pre-listing inspection does not preclude a pre-sale inspection, but it can save the homeowner time and money. Avoiding structural or safety issues is a poor choice because these issues will appear in the buyer’s inspection -- leading to delays and/or possible rejection of the deal. In her article “Common Repairs Needed After a Home Inspection: What Must Sellers Fix?” for Realtor.com, Cathie Ericson notes that “if there are problems, this professional [inspector] will find them.” While not all repairs are required, “there are some fixes that will be required by lenders before they will release funds to finance a buyer’s home purchase.”
Ericson writes that these include “structural defects, building code violations, or safety issues, sometimes in the attic, crawl spaces, and basement, and those related to the chimney or furnace.” Issues with HVAC, plumbing and electrical systems could fall into these categories, as can chemical leaks, termites and roof condition. Unfortunately, “if a home inspection reveals such problems, odds are you’re responsible for fixing them.”
#2 A Well-Maintained Home Has a Higher Perceived Value
The second reason realtors should encourage their clients to fix repairs before selling is that well-maintained homes often have higher perceived values. Meggen Taylor explains in her article “6 Tips To Sell Your Property Quickly For The Highest Dollar Even During 'Off' Season” for Forbes. Taylor writes that noting recent repairs to the home shows potential buyers that “you care about your home.” To buyers, regular maintenance of the home may indicate “how well kept the home is in less visible areas of the property.”
#3 Wasting Time on the Market Can Reduce Your End Sale Price
When a home sells fairly quickly, buyers often assume it was an incredible deal -- both well-priced and well-maintained. However, when a home has spent a much longer period of time on the market, buyers assume the worst. They expect the home is either in poor condition or the asking price is far too high. Homes with old roofs, faulty plumbing or even outdated interiors could spend months on the MLS, making buyers suspicious and delaying a sale even further.
If the homeowner is unwilling to pay for repairs, thus losing deal after deal during inspection, the home stays on the market even longer. In the article “Why Does A House’s Days on Market Matter to Home Buyers?” for Homelight, Chels Knorr writes that “houses that don’t move quickly tend to sell for less than asking price, so it’s up to you and your real estate agent to prevent your home from being on the market too long.” Knorr also recommends “you get a pre-inspection...if you want to get ahead of this and speed up your home sale.” Fixing or disclosing issues ahead of time means “buyers can’t use certain repairs as a way to negotiate down the price.” As such, fixing repairs before listing -- rather than after -- makes more sense for the owner.
#4 Cost of Repairs Will Be Higher if You Wait Until Inspection
A fourth reason to convince homeowners to fix repairs before listing their home is that rushed repairs always cost more. The Trulia blog post “10 Reasons to Make Repairs Before You Sell Your Home” explains. Its writers note that “last-minute repairs done on a tight timeline are almost always more costly since you don’t have time to shop around for estimates.” Having little time between fixing repairs and closing the sale of your home makes you -- as the seller and homeowner -- quite vulnerable.
As the post explains, “your time crunch begs for tradespeople to charge higher rush fees for squeezing the work into their schedule.” The post notes that “your actual cost to fix an item will almost always be less than a buyer’s estimate after their inspection — but since you won’t necessarily have time to fix everything before closing, you risk losing the sale if you don’t agree to the estimate.” When you have time to research, you can save money by fixing smaller issues by yourself or by shopping around for qualified but less expensive contractors and materials.
#5 You Can List Recent Repairs As Selling Points for the Home
As mentioned above, a well-maintained home often sells for more because its perceived value is higher. Similarly, making major repairs like adding a new roof or replacing broken appliances can make the home seem newer, fresher and less of a hassle for the new owner. Replacing a leaking or outdated roof is one of the best ways to increase a home’s value and garner interest in the property -- particularly when competing for buyers with other homes in the neighborhood. Today’s roofs are not only more attractive, customizable and longer lasting than those of yesteryear. According to the Homelight article “Increase Your Home’s Value with a New Roof,” “installing a new roof increases home value by almost $12,000, according to the latest cost vs. value survey.”
