Should You Renovate Before Selling Your Austin Home?

Five years ago, fresh paint, new carpet and a few cosmetic updates could make a house feel renovated. Today, those things don't necessarily command a premium. In many parts of the Austin housing market, buyers simply expect a home to be clean, maintained and move-in ready. When buyers have significantly more inventory to choose from, torn-up flooring, beat-up walls and obvious deferred maintenance aren't things they have to overlook anymore. They can just go see the next house.

One thing hasn't changed in real estate though. Location, location, location. The homes I'm still seeing sell quickly are usually in highly desirable neighborhoods, often because of schools, location, or something else that's difficult to replicate. If you're selling in one of those neighborhoods, there may be an argument for renovating because buyers will sometimes pay a significant premium for a house that is both in the right location and completely updated. But if you're in a neighborhood where inventory is sitting for months, spending a bunch of money on countertops, backsplash, flooring and bathrooms hoping to manufacture a huge return can be a dangerous game. You may end up with the nicest house for sale in the neighborhood, but that doesn't mean buyers will pay enough of a premium to cover everything you spent.

That's the big difference in today's market. Renovating to make more money and renovating to make your house easier to sell are two different things. A beautifully updated home may be the first house in the neighborhood to go under contract, and that's valuable. But if you spend $75,000 renovating and only increase the eventual sales price by $40,000, you didn't make an extra $40,000. You lost $35,000 getting there. Before recommending a major renovation, I want to know what updated homes are actually selling for compared with similar homes that haven't been renovated. Sometimes the numbers work. Sometimes they absolutely don't.

So what am I recommending to most of my sellers right now? Unless you're in a neighborhood where renovated homes are still commanding a significant premium, I'd be careful with major cosmetic renovations before selling. Take care of the things buyers and inspectors are going to care about. Know the condition of your roof, HVAC, plumbing and electrical systems, and keep documentation for major repairs and maintenance. Paint where necessary. Replace flooring that's damaged or worn out. Clean up the landscaping. Make the house feel cared for. Then comes the sentence sellers don't always want to hear: price it where it needs to be to sell. In this Austin market, spending $100,000 trying to avoid a $50,000 price adjustment doesn't make much sense.