Keeping your eye on the Prize
As with any asset, when the time to sell your home comes, the best price in achieved from good maintenance throughout the term of ownership, not just at the time of sale.
It is important that we keep our eyes on the prize. The prize is securing the best possible price for your home. Your profit will be realised when we attract a cashed up buyer, who will inspect the home on the surface then obtain a building and pest report that will influence the final dollar decision. With this understanding we have constructed this article in a way that clearly works to your final moment of truth. So let's get started with maintaining your home for profit.
In life and real estate it is often said that your principal place of residence is possibly your biggest asset. With this in mind it is important that as a property owner you do all you can to maintain the property throughout its lifetime to protect and grow your asset, so at the time of eventual sale you receive the best possible cash profit from your investment.
Also, your home could deliver you a tax-free windfall. Selling your home is a valuable opportunity for wealth and profit. Unlike other financial investments your principal place of residence is free from capital gains tax and stamp duty. Therefore, a chance of a tax-free gain is rare and should be seized with both hands. Now, this is not to forget the same principles of ongoing maintenance and preparation for sale also apply for investment properties to maximize after tax profits, but we will focus on the owner occupied home in this article.
Selling is a one-off opportunity for cash. Selling your home presents a unique opportunity to make a chunk of money without you having to sweat for it. Typically every dollar your home sells over the perceived market value is worth two dollars of your hard earned labour.
For example if you secure a price $10,000 over reserve - that saves you having to earn $20,000 pre tax to have that $10,000 in your hand. If $50,000 is achieved over reserve, you would have to earn $100,000 pre tax to have that $50,000 in your hand. Secure the dollars you deserve for the property you own. You get only one chance to sell for profit and then the value passes on to the next owner - so make the most of it!
Simple things make the difference
Remember, clean and sparkling homes sell well. If you do the work for a potential buyer and your property is clean, crisp and complete. This includes having the house well maintained and freshly painted; having eaves that are spotless and fresh; having manicured lawns and the gutters and downpipes are free from rust and holes.
Simple things like this could have a significant impact at sale time. The magic happens when you take the hard work out of the equation. Everyone is so busy, potential buyers are prepared to pay for somebody else's sweat and effort. Profit from that. A home that doesn't require work is an attractive prospect
Maintaining your home for profit is a successful strategy for everyone involved. Often incoming purchasers are stretched to their limit and would not qualify for a renovation loan. This is the reason why people will pay more for a finished, neat and well-maintained property. Also a bank will loan on a property's actual current value. A bank does not favour lending on unfinished or damaged properties. However if the property has a clean bill of health - the new purchaser is effectively getting a renovation loan on a product with no risk. It's a win-win.
Be Organised from the Start
This is all obvious advice but the real trick is to be organised, to be 'Planning for profit' and by keeping your eye on the prize, you want to create the best possible home to attract the best possible buyer for the best possible price.
When preparing their home for sale, some people redraw on the current loan to complete repairs quickly. Other people take a longer-term approach. This longer term approach not only enhances you profits as you sell your property but it enhances your enjoyment and utility of the home whilst you live there. Stay on top of your regular home maintenance tasks to avoid costly repairs in the future. Spending time now saves you hassles later. Ensure that minor repairs don't turn into major expenses, not to mention the inconvenience and frustration of living in a poorly maintained home with sticking windows, faulty taps and inaccessible gardens.
The other major issue with a poorly maintained property is when the time to sell comes, pages and pages of repairs can be overwhelming both logistically and financially. A single maintenance task might be completed on a lazy Saturday morning whilst an accumulated list of repairs required before sale, might take weeks of fulltime work. Too often, homeowners lose tens to hundreds of thousands of dollars at sale time just through not having the time to ready their property for sale. We suggest keeping a list and spending the time project managing the repairs with a slow and steady budget approach. In the commercial world, ongoing "Asset Management" is an essential part of any business efficiently and effectively maintaining the worth of that business. It's good practice in business and for your very valuable asset, it is essential practice.
Asset Management - the 'Maintenance Manual'
Firstly, buy a hard cover note book and allow two pages per area and start making the to-do list of repairs. This will be your 'Maintenance Manual'. Here is a starter list of standard areas in most homes, you may need to add areas to suit your own home: Front entry; Bedrooms; Lounge; Bathrooms; Kitchen; Laundry; Roof; Pergolas; Garages; Sheds; Driveways; Gardens; Decks; Verandahs; Pool; Fencing.
The golden rule of thumb is - if something needs to be repaired - fix it! Walk through and be picky - try and see what a potential purchaser will see - not what you have overlooked for years. Make a list of repairs and improvements that need to be made. Remember the old adage - "A stitch in time saves nine".
Buyers will mentally add up their perceived costs of repairing all those minor flaws and end up with an amount that is generally much higher than your actual costs will be. You may believe the repairs are insignificant, however the buyer may question the maintenance and upkeep of the rest of the property. Necessary, noncritical minor repairs and perceived owner neglect will either lower the price or lengthen the time to sell.
As you walk through your home, maintenance manual in hand, look at the colour palette that you have used in your home. If you have used striking, bold colours, it might be time to neutralize them. Your objective is to make your home appeal to the largest possible segment of the market. Ask yourself, "How many prospective buyers would feel able to move into my home with their own furniture and not want to replace the carpet or repaint the walls?" Position your property on the market to be as livable to as many people as possible. The market is always driven by buyer demand and the average buyer will have difficulty looking beyond bright carpeting and/or bold wallpapers.
Having walked through and critically appraised the condition of your home, walk through again and see what you have missed. Then prepare a 'to-do' list. Take photos of the repairs and stick them i your manual or reference photos in your phone. Your maintenance manual will become your profit bible.
Research the Work
Now it is time to do the research, get on the web and research the latest products that can save you time & money (profit). For example there is great tile paint for old tiles, amazing products are now available.
Having researched, Make a decision on what repairs you can do and what jobs will be outsourced. Look at DIY, visit your local hardware store (e.g. Bunnings or Mitre 10) and investigate what 'do it yourself' products are available. You will be amazed how the renovation systems have improved with ready-to- install kits. Remember to take your maintenance manual with you, it will save time money and energy.
Make a decision on what repairs you can do and what jobs will be outsourced. Invite all the trades needed to quote on the repairs. Dedicate four pages to your trades' services directory, at the back of your manual, list the contact numbers and details for all the plumbers, plasterers, painters and associated trades you will need.
Important time saver and advice
This is where the home design directory "Get a Quote" facility can save you a lot of time an energy. Rather than searching through google for tradesman's details only to find they aren't available or can't be bothered to call you back, simply post the job description and wait to be contacted by tradesman ready, willing and able to meet your needs.
Regarding outsourcing, remember all electrical maintances and improvements must be carried out by licensed electricians. Also regular pest inspections and treatment by professional accrediated professionals is highly recommended.
Do one room at a time. Start your list by committing to the discipline of doing one room at a time. This avoids turning the house into an unliveable war zone. Also keep a record of all costs, Including the materials cost, it's worth getting everything priced to give you a factual guide to the investment.
It would be nice to say 'it's never too late to start' but I guess that is the point of this article, that many people realise when they want to sell, that they should have started maintaining their home the day they moved in. So just start today, get organized and enjoy your property and when the time comes to sell, you can enjoy maximum profits.