The Insider’s Guide to Real Estate / Getting Ready / Remodeling Before Listing Doesn't Add Up

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Don't call a contractor when it's time to sell

Spend money on things that make cents

Homeowners often think about remodeling immediately after buying a home or after living there for a while. In both cases, the idea is often to improve the home with an intention to use the results and continue living there. Remodeling is never a problem provided owners do not decrease the value of the home and recognize that most of the benefits they accrue are not financial. However, once an owner decides that they are likely to sell, it never makes sense to do a remodeling project first. At least not if they want to maximize their net proceeds.

A review of the financial returns on remodeling projects can be sobering. A recent study found that most remodeling projects only return 50-80% of the money invested in the project when it comes time to sell.

The main thing to keep in mind as a prospective seller is that any home can be sold at the right price. While you can certainly get a higher price if you remodel the home, the cost will exceed your attributable financial return. Smart sellers know that to maximize their net proceeds, they need to manage commissions, get a good price, and avoid unnecessary costs. It is always, always, better to list the home in its current condition, with the right amount of staging, than to remodel first and then sell unless you plan to live in the home.

Avoid home investments that don't add up

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