Are Improvements and A Warranty Necessary?
The “For Sale By Owner” home may need improvements if the home is in poor condition. Improvements will increase the price of the sale of the home. Just keep in mind if your home is in good condition, spending a thousand dollars on improvements may not increase the sales price by a thousand dollars. However, adding improvements to the kitchen and bathrooms will more often than not increase the price of the sale.
Typically spending a thousand dollars on home improvements usually will only increase the sales price about nine hundred dollars. However, if you were able to do the work yourself, the improvement would work to your advantage. Meaning a thousand dollar project could only cost you about five hundred dollars. You will still have the same nine hundred dollar increase in the price of the sale.
It is a good idea to think twice before putting money into a home you are selling. You may not get enough of a return on your investment. The improvements will be the responsibility of the new homeowner.
However if the house were in such sad shape, it would not sell at all without improvements and major repairs, then improvement will have to be made to the home.
Once your “For Sale By Owner” home has everything fixed and is ready to go on the market, you might want to consider a home warranty. A home warranty is short term insurance to cover the major appliances, electrical system, plumbing system, heating and air conditioning while the home is on the market. The cost of the warranty is about three or four hundred dollars and paid for by the seller. However, many sellers include the cost in the sales price of the home.
Homebuilders always have home warranties with new homes. It is reasonable to want a warranty on an older home because of the older appliances and plumbing and electrical systems.
If you get a Seller’s Warranty, make sure to advertise you have a warranty on the home. It is an inexpensive method of making prospective buyers feel more comfortable before making the purchase.
You may hear about a Buyer’s Warranty. This warranty is paid for by the homebuyer and coverage starts on the day of closing and lasts for a year. This warranty covers the same appliances and systems as the seller’s warranty. This insurance can be renewed every year, it is up to the homebuyer who pays for the insurance.
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