If you’re selling your home, your first step should be to paint your bathrooms blue.
Why? Because buyers will pay $5,000 more for them than homes with different-colored bathrooms, according to a Zillow study. [1]
Minor renovations like that stacked on top of each other can increase your home’s value by thousands of dollars when it comes time to sell. And with homeowners facing more than $15,000 “hidden costs,” or agent commissions and sales taxes, according to another Zillow study, it doesn’t hurt to make a few changes that will save you the most money. [2]
What to do first: sell or buy?
Home sellers don’t always have to buy — at least not right away. In this market, there are a few other options. For those looking to upgrade or downsize, it’s still best to sell first, buy later.
“I encourage sellers who are also buyers to think about selling first,” says Eileen Lorway, a real estate agent at Redfin. “They should consider temporary rental options, or moving in with relatives after they sell. Then they will be able to take the time they need to find their dream house, know exactly what they’ll have to work with financially, and won’t end up adding unnecessary contingencies to offers, which will give them a better chance to get the home.” [3]
Since homes are selling fast, you can get a decent return on your investment. With that, you can take some time to build your offer for your next home, even if your next one doesn’t come around right after selling.
Simple additions to increase your home’s value
Before you sell your home, you’ll want to upgrade the obvious things — your lawn, appliances, and furniture. But buyers’ habits suggest that getting a new paint job and a fancy thermostat can boost your home value even further. These simple upgrades are perfect for homebuyers that aren’t sure whether to overhaul their decor or invest in bigger assets.
Smart technology
A programmable thermostat, among other smart devices, can boost your home value up to 5 percent, according to Consumer Reports. [4] Better Homes and Gardens Real Estate Tech Valley President Miguel Berger told the nonprofit product testing organization that he often installs Nest thermostats, energy-saving smart thermostats, in homes that are being sold “because it creates the impression that this is a high-tech home.” [5]
Other real estate experts are also leaning on these small devices to make homes more attractive, especially to younger buyers.
“If I walk into four houses in the same neighborhood, and one has a Nest thermostat and the agent has educated me that it could save 10 to 12 percent in my heating and cooling, that’s going to stick out in my mind. While the other houses maybe I’m going to forget about,” Angel Piontek told New York Magazine. [6] Piontek is real estate firm Coldwell Banking Elite’s marketing vice president and has 15 years of real estate experience.
More than half (54 percent) of homeowners said they would buy or install smart home products if they were selling their home and knew it would sell faster with the new technology, according to a Coldwell Banker survey. [7] Forty-four percent of those who would install said they’re willing to spend up to $3,000 solely on smart technology.
Other smart products like lights, door locks, and security systems can also make a home more enticing to millennials, Consumer Reports said.
Millennials are consuming more of the housing market than Generation X and baby boomers — which is why sellers are targeting home styles toward millennials. Here’s the breakdown of new mortgages in 2018, according to housing news site Housing Wire… [8]
- Millennials: 45 percent
- Generation X: 36 percent
- Baby boomers: 17 percent
Home decor
On average, homes with blue bathrooms sold for $5,440 more than those with other colors. And it’s not just bathrooms — walls and exteriors painted blue helped, too.
Why is blue so great? Zillow’s chief economist Svenja Gudell says it comes down to making potential buyers feel as if they already live there.
“Color can be a powerful tool for attracting buyers to a home, especially in listing photos and videos,” Gudell says. “Painting walls in fresh, natural-looking colors, particularly in shades of blue and pale gray not only make a home feel larger, but also are neutral enough to help future buyers envision themselves living in the space.
While blue may be the best color, there are others that can bump up a home’s selling price. Zillow notes that “greige” — or a gray/beige mix — increased a home’s value by $3,500. On the other hand, white rooms or rooms with no color dropped a home’s selling price by more than $4,000.
While some buyers may envision their homes to be full of oranges, yellows, and reds, not all of them think so boldly. It’s better to err on the side of safe rather than adventurous. The bolder you are, the less likely you are to sell your home. Zillow says homes with darker walls sold for $2,000 less.
Miscellaneous additions
Having heated floors, a steam shower or an outdoor kitchen can help you sell your home for almost a third more than listing price, says a study from Zillow. [9]
The real estate website analyzed almost four million homes’ listing descriptions. Listings with a shower that can be used as a steam room sold for 29 percent more than the seller expected.
The other best upgrades to add to your home to sell for more than you expect are…
- 29 percent: High-end appliances (refrigerators, dishwashers, cabinets, sink fixtures etc.)
- 26 percent: Pizza oven
- 25 percent: Pet shower
- 25 percent: Outdoor kitchen
“While everyone has different style preferences, when it’s time to sell, being specific and strategic with your home’s listing description can have a big financial payoff,” says Zillow’s chief marketing officer Jeremy Wacksman. “If you have these features in your home, try to highlight them in listing photos and descriptions as it may help catch a future buyer’s eye.”
Not looking to sell? Consider renting
In some cases, renting your home to others can be more profitable than selling it. A study by Redfin reveals, “39 percent of homebuyers plan to buy their next home and then rent out their existing home instead of selling it.” [10]
Not only do you avoid the taxes and fees associated with selling your home and making money once, but you can also create a revenue stream just by owning your other house.
If you want to rent your home out, crunch the numbers first. In a post-recession world, there is “absolutely a demand for private home rentals,” according to Josh Kattenberg, owner of Real Property Management Express in South Dakota. However, before you dive in, Kattenberg recommends comparing your monthly mortgage payment to the rental market in your area. If you can’t charge more than your mortgage payment, you might find yourself in hot water later on.
And don’t forget to take a hard look at the business side of things. Make sure you are prepared to handle managing the property like maintenance needs, collections, and property showings.
Want to sell now? Look out for these major costs
If you’re looking around your home and taking notes on what needs to be improved and renovated, that’s what most other sellers are doing, too. Zillow says more than 80 percent of sellers are making home improvements before listing. [11]
Nationally, these costs average less than $3,000, but some parts of the country are paying more than others. The most expensive area for basic home preparation costs goes to Los Angeles, where residents are paying more than $4,000. In Columbus, Ohio, it’s less than $1,500 for the same work.
There are other costs you may not know exist, like closing costs, transfer and sales taxes, and even title insurance and escrow fees. The national average is around $12,000 for sales and transfer taxes, but Indianapolis doesn’t have the transfer tax, so they pay significantly less ($8,238). In San Francisco, it’s more than $51,000 for the same taxes.
The higher your home value, the more you can expect to pay in taxes and fees you didn’t even know about. Zillow estimates that San Francisco home sellers can pay upwards of $55,000 in total hidden costs. Sellers fare best in Cleveland, where they are paying $10,000 in hidden costs.
As unexpected home costs continue to rise with mortgage rates, many young buyers are staying put in rentals. Millennials are taking a step back from buying due to lack of affordability, even though rents are climbing, too — especially for low-end units. Low-cost homes are also selling, but the people who need them the most can’t afford to buy them.
