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You're about ready to sell your home, and you realize (or perhaps already know because you had the premarketing inspection) that your house needs a new roof, a new foundation, new copper plumbing, kitchen remodeling, or bathroom upgrades. What's the best way to handle major expenses like these?
At this stage in the marketing process, you shouldn't bite off more than you can chew. If you only have a few weeks before you want to put your house on the market, you simply don't have the time to manage a huge project. Rehabs, larger and small, have two things in common:
- No surprise number one: All rehabs take longer than you though they would.
- No surprise number two: All rehabs cost more than you thought they would.
If you have to ask how much longer or how much more, you've never done a rehab. If your house is in need of a major improvement, heed the two following points:
- Don't spend big bucks on major improvements. For example, don't install a new roof just before putting your house on the market. A wiser plan is to give buyers a credit in escrow to cover the repair cost. Prepare for negotiations regarding the credit by getting several competitive bids for the corrective work from reputable local contractors, and then base your credit on the lowest realistic bid.
Why offer to give the buyer a credit in escrow? For one thing, you can avoid a huge out-of-pocket expense by handling the repairs this way. Furthermore, this arrangement allows the new owners to have the work done by their own contractor whenever they want after the sale is completed. Last, but not least by a long shot, if the buyers have problems with their new roof after the sale, the repair is their problem - not yours. You aren't liable for their contractor's work. - Don't do a major rehab of the kitchen or bathroom. You generally can't increase your sale price enough to fully compensate you for all the work and money you put into these projects. Furthermore, you can't guess the next owner's preferences in toilets, tile, and tubs. Don't even try. Odds are that you'll make the wrong decisions on appliances, cabinets, colors, finishes, and other design choices. A much better plan is to reduce your asking price so it reflects that your house has an old kitchen or bathroom instead of squandering your time and money on a major remodeling job that people may dislike.
