At 10,000 square feet, the nuances from home to home appear minimal. Staring down at the redundant landscape made me wonder: Could sellers get more bang for their home by upgrading their neighbor’s instead of their own?
Here’s the scenario:
You own a home. You’re thinking of selling the home within the next year. You have $10,000 to invest towards upgrades to help you get top dollar.
Does it make more sense to invest that in your home or your neighbor’s?
Think about it. Home pricing is driven by an analysis of recent sales of comparable homes (comps). The appraisal and lending process each start by looking at closed comps—a baseline, if you will. Buyers who have been looking for months are aware of all the recent sales in the neighborhood, as well. By the time you’re ready to put that for-sale sign in the yard, the range of pricing has already been predetermined.
Now, imagine that there is a home down the street for sale. Same bed count, similar square footage, similar lot size, same year built and clearly within the same neighborhood. If you’re looking to put your home on the market in the next few months, all your attention should be on this home. What this home down the street sells for impacts what you could list your home for. How long this home down the street sits on the market impacts the perception of pricing for your home. The price reduction of this home further impacts that perception. It’s not your home, but it is certainly affecting the price of your home.
But your home has more upgrades, your home has more features…your home is “better.”
You have a more updated kitchen? Noted.
A pool? Got it.
A new roof? Great.
Don’t get me wrong, this helps, but it doesn’t change the fact that if the home down the street sells for $700,000, it’s no longer the home down the street. It’s now the most recent comp—it’s the closest comp. More importantly, it’s the most relevant comp. If you’re thinking of listing for $900,000, that home down the street is not setting the stage for you.
Rather than pump money into upgrade after upgrade to help drive your price closer to a $900,000 price tag, your money might be better spent driving up their $700,000 price tag.
Are we suggesting that you should walk to your neighbor’s house and buy them a new HVAC system or pay for their front yard landscaping? Maybe. Those dollars might bring more value when it comes to pricing your home than if you put those dollars into your home.
It might be an awkward conversation—but, hey, they’re moving anyways.
Karen Abram is founder and CEO of dashCMA. Visit www.dashcma.com to learn more about how to simply and visually support and defend your pricing strategy with dashCMA.
Probably the dumbest idea I’ve ever read.
This is one of the most ridiculous pieces of ‘advise’ I’ve ever read.
This is really too funny. Have you ever seen this happen? In 15 years as a Realtor or anytime in my life I’ve never seen or heard of anyone paying for a neighbor’s new roof.
Glad you found it funny, that was my intent 🙂
This was NOT meant to be “advice” rather it was to bring some thought to our comp-based value system. It goes back to the idea that “it’s better to buy the worse house on the street than the best house” and how recent sales affect perception. I’ve never heard of anyone paying for someone’s roof either…but wouldn’t dismiss the idea if it would help me sell my home for more.
Correct An appraisal analysis would compare your house to the neighbors house with a new roof… and then decrease your homes value because you don’t have a new roof. Now your home is worth less and your out the cash. Very bad advice.
yeah, i’m not seeing it sorry…
I could see some landscaping. Curb appeal is important. Thinking outside the box. I like it
Cannot imagine any seller doing that. Would be a better idea to offer them a loan to put a roof on to be paid with the proceeds at closing, assuming the reason they didn’t put the roof on (or whatever is needed to sell it) was because they didn’t have the cash in hand.
I have personally done entire block party clean ups not a roof – but if you have a neighbor needing help this is not a bad idea
In my 49th year in the RE biz and read this with mouth hanging open! Got to be a joke.