If you’re a potential home seller in an inventory-tight market, rest assured there are countless buyers awaiting your listing. But that doesn’t mean you‘ll command your home’s full value if you try to sell “as is.”
“Buyers aren’t stupid. They know that a house in poor repair -- with all sorts of cosmetic issues -- can cost them a bundle to upgrade. In fact, they’ll likely overestimate the cost of all those fixes,” says Sid Davis, a veteran real estate broker.
It’s rare for sellers to need major home improvements just to get a house sold. Yet many properties need painting and minimal repairs, like replacing worn kitchen countertops or broken light fixtures, says Davis, author of “A Survival Guide to Selling a Home.”
Choosing the right contractors will be vital to your sale.
“Regrettably, hiring bad contractors can be treacherous. Your whole budget and timeline can be severely compromised by a crummy contractor,” Davis says.
Julie Khuu, who owns an interior design firm in Southern California, says the hunt for reputable contractors should start with personal referrals from friends, neighbors or family members.
“Personal referrals are much better than online referrals,” according to Khuu, who urges homeowners to meet in person with contractors before hiring them.
“Make sure you connect with your contractor and vibe well. You want someone easy to talk to,” she says.
Joan McLellan Tayler, a longtime realty company owner, cautions home sellers against contractors who push you into personalized or overly expensive improvements.
“In the kitchen, all you want is clean and clear, with standard appliances in good condition. You don’t need marble countertops or cabinet handles that are art pieces,” Tayler says.
Before signing a contract with any contractors, make sure the firms you select are insured, bonded and licensed in your state. Also, make sure their deadlines are in writing.
“When you’re a home seller, having a late contractor is a real problem,” Tayler says.
Here are a few pointers for sellers:
-- Pose many questions before choosing a contractor.
A face-to-face meeting is an important element in the process of screening contractors.
“By meeting the contractor at your house, you can identify sloppy or disorganized companies before it’s too late,” Davis says.
To make sure your project won’t get squeezed out of a contractor’s schedule by a larger job, he says you should always ask whether the company is overbooked. You also need to know who will perform the work.
“There’s nothing wrong with an estimator coming out to give you a proposal that covers price and terms. But you still need to determine who will do the actual work and whether they’re licensed for their trade,” Davis says.
-- Make sure your contractors meet local government requirements.
Davis says not all home repairs or upgrades require government permits to ensure that the work complies with local codes. For example, your electrician likely won’t need a permit to change a light fixture, and your plumber won’t need one to fix a leaky faucet.
But in many areas, larger-scale projects do require government oversight.
Maybe you think you’ll get a lower price from a contractor who circumvents the need for government permits and inspections. But as Davis says, hiring a firm that skirts the law can be risky, especially if you’re planning to sell.
“It could come back to haunt you if your contractor turns a blind eye to regulations. That’s because the home inspector hired by your buyer could blow the whistle on the contractor and ruin your chance for the sale,” Davis says.
-- Get the contractor’s promises in writing.
Davis says you should never count on verbal guarantees, even from a contractor you’ve previously hired. As he says, there’s no substitute for a written contract that provides details on all aspects of the job, including price, timing and scope.
-- Ensure that deadlines are included in the contractors’ proposal.
Those planning to put a home up for sale in the near term can’t afford delays in necessary home improvement or repair work. That’s why Davis says it’s very important to have deadlines built into any agreement you sign.
“There should be real penalties should the contractor fail to perform on time,” Davis says.
You should also make sure the agreement guarantees that the contracting company carries insurance and that all its employees and subcontractors are covered.
“Good contractors have insurance and are happy to show you proof. Insurance is terribly important in the event that any worker at your home falls from a ladder or has another injury,” Davis says.
-- Never pay for the entire project at the outset.
In some cases, it can be perfectly legitimate for a contractor to ask for a partial payment at the front end -- especially if substantial material costs are involved.
On a roofing job, for example, you might be asked for a down payment to help pay for the cost of shingles. And a painter might request that you pay in advance for paint and rollers.
But Tom Philbin, author of “How to Hire a Home Improvement Contractor Without Getting Chiseled,” warns against paying for the full cost of any job -- including all the labor -- before it’s complete. As he says, if you advance the whole cost at the outset, you’ll lose all the clout you’ll need should the contractor default.
“Good contractors have good credit lines. So you should never pay more than 10% to 15% upfront. Remember that if you lose control of the money, you lose control of the job,” he says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)