House in so-so condition unlikely to attract big-money offers

By John Adams,

Published on: 07/20/08

Last week we talked about the three reasons a house won't sell. They are condition, marketing and pricing. This week we look more closely at the importance of your home's condition.

Begin by looking at things from the buyer's perspective. Many buyers today believe that prices are falling and that interest rates are likely to decline. And because they are in no hurry, buyers won't even consider making an offer on your house unless it is in excellent condition.

The reality is this: If your home is on the market and needs maintenance or even updates to modern standards, it will likely draw only low-ball offers.

So if you hope to get near maximum market value for your home, it needs to be in excellent condition.

How do I define excellent condition? Yours needs to be a house ready to move into with no upgrades needed, no repairs to be done and no home improvement projects looming.

For example, all the systems of your house need to be brought up to modern standards. The wiring needs to be safe and adequate. The plumbing needs to work properly and with good pressure. The heating and air-conditioning system needs to be in good operating condition and at least have a few years of life remaining. Your roof needs to be relatively new and look good from the street.

The best way to make sure these systems are in sellable condition is to have a comprehensive home inspection performed by a professional home inspector. Remember that your purchaser, if you are lucky enough to attract one, is going to have their own inspector come through later, so you might as well face the music now.

And don't try to justify failure to offer good condition by saying, "Instead of replacing the plumbing now, I'll just lower the asking price by the amount it will cost." Because there are so many homes on the market that are already in great shape, your break-even offer of a slightly lowered price doesn't make sense.

Next, your home must feature a modern kitchen and bath. But there is a trap here that you need to avoid. First, you should know that improvements in these areas tend to be quite expensive. In an older home, a comprehensive kitchen makeover could involve not only new countertops and cabinets, but also flooring, electrical, plumbing, ceramic tiling, lighting and appliances.

My advice is to make sure before you start that you will be able to finish the job. A partially completed renovation looks worse than no renovation at all. Second, it is really easy to overspend in these areas. Why install a new kitchen faucet with only hot and cold water when you can buy one with six different spray heads and a built in cellphone with GPS? It's only money, and the salesman will assure you that buyers will love it.

The cure to this temptation is to know the competition. Know what price range your house will likely bring once it is in good condition, then see what other homes in that same price range have to offer.

Your job is not to offer perfection, but simply to beat the competition in your neighborhood and price bracket.

Finally, a word about getting your home ready to show. Today, the buzzword in the real estate industry is "staging," or the art of decorating and presenting a home to its best visual advantage. While rookie agents think that proper staging is a new science, the successful real estate veteran has been "staging" houses since we all lived in caves. Staging is nothing more than removing the clutter of everyday living and painting a vision of blissful homeownership — whatever that means.

Ask some agents to tour your home and make recommendations. Rank their suggestions based on your own experience looking at homes already on the market. Remember the ideas that offer big bang for the buck. For example, for a relatively small investment, you can often get a big return with newer and brighter light fixtures.

One final consideration is market timing. You may be better off waiting to sell until the market improves. If you are simply unable or unwilling to put your home into excellent condition prior to selling, you might be better off postponing your sale or leasing your home until the buyer's advantage diminishes over time.