Gauging pre-sale fix-up work on your home

By: Dian Hymer: Inman News
Usually it's worthwhile for a seller to fix-up a home before putting it on the market. Listings that are in move-in condition attract more buyers. The more interest there is in a listing, the more chance a buyer will make a strong offer. Buyers tend to pay more for homes that they can move in to without doing a lot of work.

The prospect of a profitable sale is a strong incentive for some sellers to turn themselves into general contractors, for the short term. This can have a positive result because most buyers have difficulty imagining what a listing might look like if they were to do the refurbishing. There's nothing like showing the finished product to convince buyers that they'll feel at home in your home.

Another reason to consider fixing your home up for sale is that it will make it easier for real estate agents to sell it. Houses that show well are a pleasure for agents to show, so they are shown more often. If your home is a show stopper, word will get around. This can only help bring about a quick and profitable sale.

But beware. A good fix-up for sale job, including a well-staged decor, can blind buyers to defects that they will surely discover after they move in. Keep this in mind when you embark on your fix-up for sale endeavors. There's a fine line between making a listing presentable and misrepresenting the condition of the property.

Disclosure laws vary from state to state. Check with your real estate agent or attorney to make sure that you don't violate your disclosure obligations in your effort to show your home in a better light.

One seller figured that his three-bedroom home would sell for a lot more if it had a family room. So, before he listed his home for sale, he converted an area of his basement to a separate room by adding paneled walls and a dropped ceiling with recessed lights. He painted, installed a carpet over the cement floor and moved furniture in to create an inviting setting.

Thanks to the seller's improvements, the house sold for a good price. However, the seller ended up being sued by the buyers because he failed to disclose that the house had a serious drainage problem. The house was located in California where home sellers are required by law to disclose all material facts when they sell.

Not only did this seller fail to disclose the problem, he intentionally led the buyers to believe that the downstairs room was usable living space. However, during the first heavy rain storm after the buyers moved in, the basement flooded. The basement improvements were damaged beyond repair.

HOME SELLER TIP: Before tackling a major fix-up-for sale project, have your home thoroughly inspected so that you are aware of any serious problems. You may want to make some repairs while you're preparing your home for sale. However, if your renovations conceal rather than correct a problem, make sure the buyers are aware of this before they make an offer.

Sellers often fear that disclosing defects will keep their home from selling. Actually, the opposite is true. Buyers who are aware of defects before they buy usually don't sue the seller after closing. However, when buyers find out after closing that the sellers intentionally concealed a defect, it's a different and often unpleasant story.

THE CLOSING: It's good to prepare your home for sale in order to show off its potential. But, concealing material defects in the process can get you into trouble.

Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.