To Fix or Not to Fix

It is a little known fact that when Hamlet was on stage asking, "To be, or not to be, that is the question," Hamlet's mother, the queen and Lady of the House at Elsinor was in another part of the castle asking her real estate agent at the same time, "To fix up or not to fix up?"
You can't be in real estate too long before someone asks you Standard Real Estate Question #3: Should I fix up and update my home before I list it, or let the new owner do that?

To which I would generally give standard Real Estate Answer # 36A which is, "Gee, that's a tuffy."

That's a joke.

I would say paint, clean up, don't spend a lot of money. And don't believe the TV shows that purport to show someone spending $2,000 on fix ups that net $40,000 more in home sale price. Not in this market, anyway. (Any house that can be flipped like that was being flipped like that.)

What's not a joke is this: in a hot market where people are bidding up homes, or at least feeling like if they don't act right away they will lose out, whether you paint or not, or replace the deck or not, or replace that 1970's orange shag carpet or not usually didn't make a whole lot of difference. The house was going to sell anyway.

Think of it this way: in a rising market buyers are competing with other buyers. But now we are in a buyer's market. Now, with nine or ten months of inventory sitting on the market, the game has changed. In a buyers market, the houses compete.

And if you are going to try to sell a home, you need to understand this change and it all has to do with time on the market.

In June of 2006, we had about 2100 homes for sale. That month we had about 800 closings. By dividing the total inventory by the closings (2100 / 800 = 2.6) we get how many months of inventory we have. (If no more homes came on the market, and we continued to sell at the rate of 800 per month, in 2.6 months we would sell the last available house.)

Now jump to today. We have 2778 homes for sale. We have 293 closings. That equals 9.4 months of inventory.

With nine months worth of homes on the market, the fix up answer changes dramatically.

We have a new goal: get to the front of the long line of houses (about 2500 at this count) waiting to be sold.

We do that by being fixed up completely. If a buyer has lots and lots of choices, they don't have to accept a house that needs new paint or gutters repaired. They don't have to put up with a kitchen that needs new cabinets because there is probably one out there. And the money you spend isn't about how much you'll get back, but about what it takes to be the best house in a very competitive market, and get it sold at all. And pricing is about value: it is no longer about being priced fairly, but about being the best value for the buck - which might mean being lower than other comparables in the area.

So when someone asks me if they should replace the deck I say yes. Put in new carpet? You bet. Have a landscaper trim the plants ...yes.

Think of it this way, it is deal or no deal and your house is what they are looking at and comparing their first impression with all the other houses on the market in that price range. You don't want anything to get in the way of their saying "Deal!"