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How Upgrades and Upkeep Affect Price
Unlike other price factors that we've discussed in the past few months (such as location, affordability, and market conditions), the upgrades and upkeep of a home can usually be assigned a specific dollar value.
However, it's easy to reach wrong conclusions if you don't take all the necessary factors into account.
Let's look at upkeep first. Upkeep refers to essential maintenance that must be done to keep a home livable. In the case of upkeep, the questions to ask are: how long ago was this replaced or repaired, what is the lifespan, and what is the typical cost?
For example, say the roof of your home needs shingling every 25 years and the cost is about $4000. After 15 years, there would be about $1600 of value left. However, if the shingles were near the end of their lifespan, there would be almost no value remaining. In addition, buyers would likely adjust their offers downward to compensate for the hassle of re-shingling in the near future.
It's often hard to tell just at sight whether repairs will be needed soon. A roof can look great for many years, and it can be difficult to determine its exact age. This is why it's a great idea to keep all the repair bills for major items (furnace, roof, floor etc.), to eliminate guesswork and reassure potential buyers.
In addition, when selling you should make a point of repairing any small flaws, such as dripping taps, noisy fans and broken locks. These give buyers the impression that the home is run-down, which can make them nervous about major items, even if those have been kept up properly.
Meanwhile, upgrades follow a similar rule to upkeep (lifespan, cost, and how recently the upgrade was made). However, upgrades add a new wrinkle to the equation: personal taste.
Say you've recently remodelled your kitchen and you calculate the remodelling to be worth $20,000 today. That doesn't mean it'll add $20,000 to your selling price! If you're lucky enough to find a buyer who shares your taste in colours, materials, and layout, the remodelling may be worth close to $20,000 to them. However, if their tastes are different from yours (which is the typical situation), it may only be worth $10,000.
Some upgrades can even have a negative value for certain buyers! For example, as I've mentioned in the past, some buyers see an in-ground pool as a negative because they will have to pay to remove it.
The best way to determine the present value of your upgrades is to ask your Realtor, who will answer based on market conditions rather than their personal tastes. Your Realtor can also advise you on any needed repairs and potential ugprades to maximize your return.
(This is article #5 of 6 about the factors influencing the selling price of your home. For the first four articles, see the 'Smart Selling' section of my site.)
Want to know more about upgrades and upkeep? Just ask me, I'll be happy to help.