Sheri’s Blog

Yesterday, I was talking to a gentleman about his home. He and his wife have decided to try their luck at selling “by owner”. They have priced their home well over $500,000. And though the neighborhood is nice, this seemed extremely high to me. When I asked how they arrived at the asking price, he said they based it on what they invested in the home over their last seven years of occupancy. This included necessary repairs (there had been many structural problems) as well as upgrades.

Many home buyers believe that their home’s value is directly proportional to the amount of money they invest toward repairs and upgrades. For example, if they purchased a home for $150,000, then invest $150,000 towards repairs, maintenance and upgrades, their home should be valued at $300,000. Sounds logical, right?

WRONG! Purchasers expect the home they buy should be free of problems. If the home is in bad condition, a purchaser will offer a discounted price to allow for the repairs to be completed. And while there is some value to “upgrades”, most buyers are willing to pay only so much for a home in any given neighborhood. If that price is too high, purchasers will bypass the home in favor of a better valued home down the street or a similarly priced home in a nicer neighborhood.

Remember, the market (buyers) determines the value of a home, not the seller or the Realtor. Your home is only worth what a buyer is willing to pay for it, no more and no less. Purchasers care little about what you have invested in a home if they know they can purchase another down the street for less.

MORAL: Be prudent about the upgrades you make; you may never get that money back in dollars and cents. And know that there are always associated costs that come with home ownership. Hopefully after making any upgrades, your return will come in the form of the personal fulfillment you receive from living in a beautiful home which is now branded with your own style.