Maximizing a Home’s Value

Every day I get asked: “How can I sell my home for the highest possible price? What can I do to maximize the value in my home?”

People asking me these questions are mostly sellers wanting to sell in the near future. Also, owners who are remodeling their homes ask me because eventually they will sell and want to make sure the improvements they are making are worthwhile longterm investments which will add value to their homes in the future. The answers are different for these two groups.

For the immediate sellers, the goal is to make the home as attractive to potential buyers as possible without spending too much money. Buying a home is an emotional process and visualizing the possibilities are difficult for most people. The properties that sell for the highest value are ones that are either completely renovated or ones that need a complete makeover.

That might sound odd, but what we have seen in the marketplace is most buyers do not want to spend the time renovating homes after the purchase, so they will pay more for a home in move-in condition. On the other extreme, there are investors and do-it-yourself buyers who love to remodel and will pay for properties that they can transform. The properties that were remodeled in the last 20-40 years tend to sell for the lowest price compared to the extremes because it looks outdated. The advice I give to sellers then is to come up with a budget and we can do the items that will yield the highest return on the investment. The good news is it does not take a huge amount to make a home attractive.

We typically start with the exterior. Curb appeal is extremely important as we do not want buyers to come by and be turned off before they have a chance to discover the beauty that lies inside the home. A little power washing, paint and landscaping can do wonders. With our small 25-foot frontage in this area, this expenditure can yield high returns.

Inside I typically recommend paint and either polish the hardwood floors or replace the carpet. You would be amazed at how much time buyers spend analyzing the walls, floors and ceilings to look for damage, even if they were damaged many years ago and repaired. Subconsciously, buyers think that the home has not been well cared for if they see deferred maintenance. Also, this is an opportunity to “neutralize” the home so that it will appeal to a broader base of buyers.

Next, we turn our attention to the kitchen and baths. These are areas we can spend a lot of money and, unless done right, will not yield a large return. So, remodeling these areas are on a case-by-case basis. I would make sure that these areas are functional and do minor repairs or replacements to satisfy the visual appeal.

What about the back yard? People like to see a nice back yard, but landscaping can be rather expensive. I normally recommend a thorough clean up, making sure the fences are okay, and doing the little things to show a usable back yard.

My advice to people who are remodeling to live in include all of the above. Most other questions will be: “Should I spend the money to alter the floor plan? Should I put in high-end kitchens and baths? Should I do structural work to create more open spaces?”

All of the answers will depend on their budget and longterm goals. If they are planning to stay there for a long time and have the resources to renovate the property to their own taste and liking, why not? However, if the goal is to remodel now for sale in a few years, then the decision might be different and some moderation might be prudent.

Please keep in mind that styles and materials change over time. What is currently the newest, best and hottest may not be the style 10 years from now and the remodeling will look outdated.

Maximizing real estate value is fun and exciting but should also be dependent on the time frame and goals you are trying to achieve.

John M. Lee is a broker with Compass specializing in the Richmond and Sunset districts. If you have any real estate questions, call him at 415-465-0505 or email johnlee@isellsf.com.