We are regular readers of the Financial Uproar blog back at the office, and we no doubt had a chuckle when we read its take on why a personal home isn’t an investment. And while we would love to split hairs about it like political discussions at this year’s Thanksgiving table will split up families, we do agree that many people falsely equate their personal home purchase with the true nest eggs they should be sitting their glutes on until retirement.
However, just because you can’t pull in returns on your home like a well-managed portfolio can doesn’t mean you don’t owe yourself a handsome return on your home investment.
There’s also the comfort factor. Results of extensive in-office research show you can’t live inside your retirement portfolio until you cash it out. The roof leaks every time it rains. Jehovah’s Witnesses know you’re still home when you don’t answer the door. People act awkwardly when they show up to house parties. Embarrassment abounds.
Yet, you can live inside your home, forgoing the expense of rent in favor of equity-building mortgage payments and fixing up the place in whatever garish color you please. More importantly, all that equity comes back into your pockets when you sell, as Nelson-sensei himself describes being flush with cash after his own home sale.
So, buying a personal home can hand you back a pretty substantial financial reward, especially if you sell it right using the following profit-maximizing tips:
Dress Your Home for the Buyer You Want
If you want your home to sell quickly, it’s got to look the part of a well-mannered abode fit for the intentions of the average Subaru-driving homeowner. That means investing a little bit of dough in sprucing up appearances. You may not get 100% of this investment back in the home sale, but it does mean that a sale is able to happen, and quickly.
In fact, quickness is a huge factor in getting your listing off the market before it grows all stale and mouldy, according to frequent seller of Fleetwood properties for sale near Vancouver, Neeraj Sood. Sood says that listings that last more than 60 days tend to get much poorer offers and more aggressive hagglers.
Therefore, making small investments can have a huge impact on the sale of the home, including its speed-to-close and final closing price. Sood points to improvements suggested by sites such as Bankrate, which point out that home upgrades like refinishing your hardwood floors or adding insulation can help you get back nearly 100% of what you put in, meaning you directly boosted your home’s closing value. Even better, some improvements like a new roof can nab you a positive return on investment.
Even with everything fixed up, you still need to put on the final airs for when home buyers arrive. “People are always shocked when I ask them to make it look like they never lived in their homes,” observes Sood. “But, owners forget that people are not buying the home because you lived in it, it’s because they want to live in it.”
For this reason, Sood always advises them to analyze the target market they think would be motivated to buy a home most, even if it goes against their own delicate sensibilities. “I had one couple nearly freak out when we brought a baby crib into a spare room during home staging. ‘That’s the cat’s’ room!’ They cried.”
Know Your Neighbors and (Price Accordingly)
Controlling your own property when trying to sell is one thing, but a lot of times neighborhood values can offer an unexpected dose of reality when it comes to home values.
Carl Bretzlaff, who helps people with selling as well as buying a home in St. Albert near Edmonton, says that many people have no clue what their home is worth because they don’t understand how property values work in general.
“Realtors say location, location, location, but maybe we need to say it five or six more times to get through to them,” he says with a dry chuckle. The issue is that homes are not built in a vacuum; they are built on land in an area with connections to past, present and future development. If no one sees that land being near anything interesting in the next decade or so, home values suffer accordingly.
“It’s kinda sad to see these people who bought these frankly gorgeous historic homes back in what used to be the woods, but now their neighborhood is surrounded by cheaply built townhomes that just drag their value down.”
For this reason, he tells people to put in the research on their neighborhood to find positives to focus on. These aspects can offset the perception of value associated with an area.
“One buyer found out that an actor who played a bit part in one of the shows he liked once lived in the same neighborhood as my listing. He couldn’t get over the fact!”
Bretzlaff now encourages everyone to name drop like crazy when they get the chance. Even if there is no Fabio to speak of, naming local politicians and businessmen who live nearby can give the impression that the community is rich with movers and shakers.
Conclusion: Be Ready to Sell Well Before You List
In the end, both real estate agents we spoke with said that the biggest reason people take a hit in the closing price of their home lies in killing momentum during the sale. The more you have your home prepared and the more research you have available when pricing, the less chance that a deal could stall or end up with thousands knocked off the final price.