Despite Hot Market, Sellers Plan Big Updates Before Listing
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Buyers are willing to pay ever-higher prices, and homes are snapped up soon after they’re listed — you might think a seller in that environment would just sit back and watch the offers roll in.
However, that is not the case with U.S. homeowners.
Most homeowners who plan to sell their current home in the next 12 months (86%) intend to spend money on major repairs or renovations to make their home more appealing to potential buyers before selling it, according to a new NerdWallet survey conducted online by The Harris Poll. Nearly 1 in 3 homeowners who plan to sell in the next 12 months (32%) intend to spend $10,000 or more on these repairs or renovations.
This urge to update is set against the backdrop of a hot real estate market: According to a February 2022 report from the National Association of Realtors, home prices have risen by nearly 30% since 2019, while inventory has fallen 57%.
Note: Throughout this report, "home sellers" refers to homeowners who plan to sell their current home in the next 12 months.
Key Findings
Nearly 1 in 10 U.S. homeowners (9%) plan to sell their home in the next 12 months.
This is consistent with our March 2021 study, when also 9% said they plan to sell within the next 12 months.
Most home sellers (86%) say they plan to spend money on major repairs or renovations to make their home more appealing to potential buyers prior to selling it.
32% plan to spend $10,000 or more.
9% plan to spend between $5,000 and $9,999.
5% plan to spend between $2,000 and $4,999.
Homeowner interest in selling soon is holding steady
Almost 1 in 10 homeowners (9%) plan to sell their current home in the next 12 months, matching the results from our March 2021 study (9%).
Selling your home usually means moving to a new one — specifically, one that’s a better match for your needs. The top motivation for home sellers to list their current home is more space (35%).
Seeking more space could be tied to an age-old need for extra square footage: kids.
15% of homeowners who are parents of children under 18 are more likely to plan to sell their current home within the next 12 months than homeowners who aren’t (7%).
39% of homeowners who are parents of children under 18 are more likely to plan to sell their current home within the next two years than homeowners who aren’t (17%).
54% of homeowners who are parents of children under 18 are more likely to plan to sell their current home within the next five years than homeowners who aren’t (31%).
Are repairs and renovations a must-do for sellers?
Sellers are apparently taking Mom’s advice to “leave it nicer than you found it.” A striking 86% of home sellers say they plan to spend money on major repairs or renovations to make their home more appealing to potential buyers prior to selling it.
"Before spending a lot of money, figure out what your goals are,” says NerdWallet home and mortgage expert Holden Lewis. “Do you want to sell quickly? Then you might focus on curb appeal and interior counters and cabinets. Do you want a good return on investment? Then you might forgo expensive renovations and spend on paint and a tidy front yard. It's helpful to get advice from a real estate agent who can help set spending priorities.”
A renovation or repair can be simple — a fresh coat of paint in the living room and trimming the hedges. But the survey shows that many home sellers have bigger ambitions, and they’re ponying up some serious cash to achieve them. Among home sellers:
32% plan to spend $10,000 or more.
9% plan to spend between $5,000 and $9,999.
5% plan to spend between $2,000 and $4,999.
Our March 2021 study showed that 21% of homeowners who planned to sell their home in the next 18 months intended to spend at least $10,000 on major home repairs or renovations before selling.
There's a long list of repairs and renovations homeowners do to make their home more appealing to buyers before putting their home on the market. Not surprisingly, a highly visible part of a home — flooring (43%)* — tops the list. However, projects that can be more complex, like a bathroom (41%)* and kitchen remodel (31%)*, are also popular.
One possible reason so many home sellers plan to spend thousands on repairs and renovations could be the number of entries on the to-fix list. About 4 in 5 (81%) home sellers who plan to do repairs or renovations will do more than one, and about 3 in 5 (63%) plan to do three or more repairs or renovations*.
But homeowners who aren’t planning major renovations aren’t necessarily at a disadvantage. “Some repairs simply have to be done,” says Lewis. “If the roof leaks, you'll have to fix it. Once the home's systems are in good shape, it's hard for some sellers to resist putting their best foot forward by renewing things like tired floors and bathrooms. But sellers should beware of spending too much. Even outdated homes will find eager buyers, because would-be buyers outnumber sellers these days."
Home seller takeaways
Temper your expectations. Making repairs or renovations can boost the value of your home on paper. But until you sell your house, you’re spending real dollars on potential gains. "You're probably not going to increase the home's value by as much as you spent on renovations. But judicious improvements can make your home more competitive, allow you to sell it faster and make you feel proud about the dwelling that you're passing on to a new owner," Lewis says.
Make clear goals, and stick to them. Repair and renovation costs can add up quickly. To limit unplanned expenses, make sure you align each update with a specific goal. If, for example, the main thing your home needs to compete is improved curb appeal, then updating a bathroom might not make the cut. Share your ideas with your real estate agent to better understand what impact your planned updates could have given the specifics of your market.
Doing nothing is an option. Compare the cash you’ll need for updates plus the cash you’ll need to move to your new home against the amount you’ll earn on a conservative sales price. If the margin is thin, consider whether the updates are necessary. Remember: Just because other homeowners make changes before selling doesn’t mean it’s the best choice for everyone.
