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Ten Ways To Raise The Value Of Your Home
Betsy Schiffman
FORBES Magazine

As the real estate market softens, what can Americans do to still get the best price for their homes? According to the U.S. Census Bureau, with 1.2 million homes for sale in the first quarter of 2003, a 4% increase over the same quarter last year, the competition among sellers is stiff. So how do homeowners give their properties an edge?

One way is to increase the value of their home. In some cases, that could mean spending significant money to put in a swimming pool or tennis court, but there are also less expensive ways to make one's home more attractive--without jacking up the appraised value or property tax bill. A fresh coat of paint or a revarnished floor will go a long way toward impressing prospective buyers without having to take out a home improvement loan.

Homeowners may want to consult with their real estate agent or other experts when they put their home on the market. A home could be in mint condition--in the owner's eyes, at least--but owners may be surprised at what they hadn't thought about. For example, Bruce Taylor, president of ERA Key Realty Services in Milford , Mass. , suggests that sellers be aware of unpleasant or unusual odors before showing a home. It came as a shock to one Massachusetts family when Taylor advised them to immediately stop using pungent Asian spices in their food if they had any hope of selling their house.

"It's critical to attack home odors immediately," Taylor says. "Whether the odors are from animals or from food, it's the first thing people notice when they walk into a house, and it can completely change the way a house is perceived. And when you're living there, you don't smell it."

Taylor 's client family was initially taken aback by his demand, but when they sold their house while other neighborhood houses lingered on the market, they couldn't complain. In the scheme of things, it was a small sacrifice to make, and it allowed them to successfully sell their home at the price they wanted.

Marketers have all kinds of theories about which colors or scents put consumers in the mood to buy. In the case of home sales, cosmetic changes rather than major renovations can make a huge difference in the sales price. Taylor has seen some houses sell at $15,000 below an asking price, and they may remain on the market for months, not because there were major problems with the house but because the home may not have been presented well enough to sell.

The real estate brokers we spoke with use a general rule of thumb: The average cost to make a repair could cost the seller double during price negotiations if it's not attended to or first disclosed. For example, a leaky roof may cost $2,000 to repair, but if the leak is not fixed by the owner or is first discovered during an inspection, it could make a $4,000 difference in the final sales price.

"A small investment can offer a large economic return," says Dorcas Helfant of Coldwell Banker Professional, Realtors in Virginia Beach, Va. "It's not about what you are comfortable with in your home; it's about whether or not future home buyers can imagine themselves living there comfortably. A $4,000 to $5,000 investment in new carpet may make a $10,000 difference in the sales price."

Furthermore, if a home's appearance rubs brokers the wrong way, it may not get shown, and once a house lingers on the market for too long, it becomes stigmatized, decreasing the chances of its selling at the asking price.

"Once the house has been on the market for a period of time, the owner may want to go through the house and redecorate and make repairs," Taylor says, "but then they may have to put out new marketing materials and a special announcement suggesting the home has been repositioned in the market. But that might have to be accompanied by a price reduction."

When it comes to major remodeling jobs, the entire cost of renovations are rarely recouped in the sales price. For example, Remodeling magazine's annual cost versus value report, which looks at how much of the costs of remodeling projects are recouped in the sales price, found that on a national average, the most cost-effective remodeling jobs were bathroom additions and second-story additions. In both cases, home owners saw 94% of costs recouped.

More functional renovations, such as high-end window replacements and roof replacements, weren't money suckers, but in the end they didn't offer as significant returns.

IN PICTURES: 10 Ways to Bump Your Home's Value