Home sellers who think an improving real estate market means they'll do fine selling "as is" are sadly mistaken, says Eric Tyson, co-author of "House Selling for Dummies."
"Even in a hot market, people who are too lazy or cheap to do the fix-ups their real estate agent recommends always wind up leaving a lot of money on the table," says Tyson, a personal finance expert.
Granted, as the economy strengthens, more homebuyers have cash to spare for home improvements after purchasing a place. Yet most people are loath to buy a home that needs immediate improvements to make it livable.
Tyson says nearly all homes need improvements to enhance their salability -- even if those fixes involve only cosmetic issues like dirty carpets or leaky faucets.
Despite improvements in housing markets, the supply of contractors still exceeds demand for most types of work -- including basic painting, cleaning and carpet replacement. That's because the home-improvement field is still populated by many who lost jobs during the financial crisis and then went into business for themselves.
But competition for the best contractors isn't limited solely to home sellers. It also involves homeowners who don't plan to move but need help with big remodeling jobs.
Harvard University's Joint Center for Housing Studies is now projecting an increase in remodeling spending, as more distressed properties come back onto the market and more owners of baby-boomer age are retrofitting their homes to suit senior living.
"What's unfortunate is that more quality contractors who would have gladly done small jobs during the recession are now limiting themselves to big contracts. That makes it harder to get help for small repair jobs," Tyson says.
Here are a few pointers for sellers:
-- Ask your listing agent for contractor referrals.
Experienced real estate agents who are active in their profession typically maintain an up-to-date list of trustworthy contractors -- including plumbers, painters, electricians, carpenters, carpet installers and roofers.
Such a roster can be hugely helpful to sellers who need repairs and upgrades done quickly and competently, Tyson says.
Many contractors seek to please agents because they represent the prospect of a steady stream of repeat business. This makes the contractors on an agent's list more accountable.
-- Meet face-to-face with contractors before hiring them.
These days, an increasing number of people believe they can make all arrangements for home improvement work solely through email, fax or phone. But Judy Luna, a veteran real estate agent affiliated with the Council of Residential Specialists (www.crs.com) says there's no substitute for a face-to-face meeting.
"You won't get an accurate estimate of the cost of the work unless the contractor comes to your home. Also, meeting one-on-one gives you a better feel for the company," says Luna, who adds that it's also important to check references.
"Word-of-mouth is always your most important guide," Luna says.
-- Seek your contractor's promises in writing.
Tyson says that homeowners too often make agreements with contractors based on verbal promises -- even on large jobs. But he says it's crucial to obtain a written contract that covers all the major aspects of the work—including scope, timing and price.
Given that the timely completion of work is one key to the success of your home sale, he urges you to put into your written agreement penalties that would be imposed in the event the contractor fails to finish on time. You might also consider incentives for early completion of the work.
"You don't want the contractors to delay your job because they come across a bigger or more lucrative project," Tyson says.
He says you'll also want to include in your agreement language indicating that the contracting firm guarantees its work and carries all the proper insurance coverage on its employees and subcontractors.
-- Don't let contractors skip government inspections.
Not all home repairs or upgrades require that contractors obtain a government permit to make sure the work complies with local codes. For example, an electrician usually doesn't need a permit to change a light fixture and a plumber typically doesn't need one to install a new water heater.
But major projects are a different story. Examples could include the installation of a new bathroom or deck.
You might think you'll get a better price from a contractor who asks to circumvent government requirements. But Tyson says that sellers who seek to skirt the law could put themselves at risk of a lawsuit by those who buy their home.
"Contractors don't enjoy having to get permits or to have their work inspected. But you still have to be sure they meet all the necessary government laws and codes," he says.
-- Don't pay for the whole project at the beginning.
You might find it necessary to make a partial payment to a contracting firm at the outset before its work begins. This is especially likely if the contractor faces significant material costs to get your job going.
For example, you could be asked to make a partial payment for new carpeting before installation occurs. Or you house painter might request that you cover expenses for paint, rollers and brushes before work begins.
But Tyson says you should resist paying for the entire project, including labor costs, until it's all done.
"Once the contractor is fully paid, you lose all the leverage you'll need in case something goes terribly wrong. So resist paying for as long as you can," Tyson says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)