Are home improvements worth the cost when selling a home?

Q: Our home has been on the market for a month and — so far — no offers. The broker has now suggested that we might do better if we paint the interior of the home. This is a big cost for us. Should we have the interior repainted?

A: According to the National Association of Realtors, “properties typically remained on the market for 18 days in November, equal to October and down from 21 days in November 2020. Eighty-three percent of homes sold in November 2021 were on the market for less than a month.”

Bidding wars are common in many markets, and so are selling values well above list prices. In San Francisco, one home sold for more than $1 million above the asking price, according to KRON television station.

Such numbers offer a rough suggestion of where we are in terms of sale times, however, such measures are tricky.

All properties are different in real estate. Even two models of the same townhouse in the same development are each unique. This quality of uniqueness means that we can measure average sale times, but does not guarantee that all properties will sell with equal speed or at the same price.

In this situation, you have a property available for purchase and a listing broker who now suggests that the home may be more desirable with a change of paint. And, once more, the uniqueness issue comes into play.

Not only are all homes unique, so too are all buyers and all transactions. We could say that the fresh paint suggestion will be a “success” if a buyer suddenly sweeps in and makes a full-price offer or a “failure” if nothing happens. However, if there is a purchaser, we don’t know if the new paint job influenced buyers’ hearts and minds or other factors were at work.

There is also the problem that we all have different paint preferences. It may be that if you repaint, buyers won’t like the new color. You might be driving away prospects.

The real problem is that you want to sell the property and move on. If the walls are worn and weary, then new paint may have been needed before the home was placed on the market.

An alternative solution might be to change your terms. Offer to pay x dollars for a “seller contribution.” The buyer can use the funds to repaint with the color they want, buy drapes, add to their bank account or whatever. However, because of typical loan program rules, what they cannot do is use seller money or credit for the down payment.

Most loan programs allow transactions that include a “seller contribution” equal to a given percent of the sale price. For instance, the FHA and USDA allow a 6% seller contribution, while the VA is a 4%. Allowable seller contributions for conventional loans vary according to the amount down and whether the home is a residence or investment property. Speak with lenders for details and specifics.

But, before painting or offering a credit, take a careful look at your market. How long does it take for the typical home to sell? What percent of listings sell above the asking price? Maybe a little more time on the market will solve your problem with no additional cost.