If you're interested in selling your house or condo in the next few years, you know the importance of equity — the money you will have, once you've paid off any loans or liens.
When you first bought, perhaps you figured you would build equity the old-fashioned way, by simply waiting. However, there are proactive ways you can build equity, thereby upping the dollar amount in your pocket when you sell.
We reached out to Sotheby's International Realty Managing Broker Randall O'Dowd to get inside tips on increasing equity.
1. Increase curb appeal
The first thing potential homebuyers see when looking at your house or condo is the exterior. The nicer things look from the outside, the more positive buyers feel from the moment it comes into view. In fact, good landscaping adds up to 28 percent value to your home, writes landscape economist John Harris for houselogic.com.
It isn’t just the look that increases equity; it's also the maintenance. That doesn't mean you have to completely overhaul your yard. However, you can pick up some flowers from a local greenhouse for flowerbeds or planter boxes on the porch or balcony. You may also try planting shrubbery that looks nice year-round and even consider choosing a low-maintenance tree to spruce up the front yard.
The exterior of a condo building is harder to freshen up. Since the exterior is common area you will not have the authority to make changes to the landscaping. But you can clear out dead leaves and make sure the wind didn’t deposit any litter in the shrubs. Also, you can sweep the steps and have the property manager clean lobby and entry doors and windows. The first impression means a lot to buyers.
Like most people, you’ve probably accumulated a lot of stuff. Perhaps it’s clothing that is taking over the closets, furniture you’ve collected or inherited over the years or even items your grown children have left behind. All of these things take up space and detract from the total square footage potential homebuyers will see.
Without spending thousands of dollars on an addition, you can visually increase your house or condo’s square footage by simply decluttering. More space, whether perceived or actual, can mean more home equity.
3. Maintain, maintain, maintain
A large portion of your home’s equity will be based on how well you have maintained it over the years. Have you kept up with small repairs like fixing a leaky faucet or pipe at first onset? Did you have your carpets cleaned often? Did you power wash the exterior or paint the deck on a yearly basis? Have you trimmed your trees and shrubs, weeded regularly or put in the correct landscape provisions to prevent weeds from overtaking?
By keeping up with the upkeep of your indoor and outdoor areas, you will not only ensure they are in good shape when it comes time to sell, you will also have lower repair costs when moving, allowing you to use that money on your next home.
If you haven't kept up with maintenance, it's not too late. Start now, taking it one job at a time, so you're not overwhelmed when it's time to list.
For condo owners, the HOA takes care of the exterior and the individual maintains from the wall paint in. That includes kitchen and baths. It is easy to take a wrench and make sure all of the faucets and toilets are securely fastened and oil squeaky hinges in doors and appliances.
4. Have a home inspection
Addressing noticeable problems is one thing. Taking care of issues within the structure and inner workings of your home is another. However, buyers will order a home inspection when they're considering making an offer, and you do not want any surprises.
As such, order an inspection every few years, or when the thought of selling first occurs. Doing so will help you tackle any issues as they come up, and you can fix them at your own pace. That could include taking the time to compare costs on needed repairs and avoiding any rush, so you're not at the mercy of whoever can get the job done quickly, instead of well.
Your house or condo will be in pristine condition when you're ready to sell and, the less money you spend on rushing to fix every problem at once, will equal more equity to transfer to your new living space.
5. Earn double equity
The term "double equity" may cause you to do a double-take, but it is possible. By planning ahead, you can build equity in your new home for a couple years before you move into it.
“Buyers who are looking at moving up in the condo market are frustrated by the low inventory over the past year. The lack of options in the resale market are making buyers look to the future by checking out new construction as an option, where they can lock the purchase at 2017 values and ride the appreciation wave” Sotheby's International Realty managing broker Randall O'Dowd said. "And, if the new construction building is not going to be completed or ready for occupancy for a couple years, the buyer gets to remain living in their current home while their home values increase 10 to 15 percent."
Nexus is being built in downtown Seattle, and future residents can pre-buy condos without having to make payments until they move.
“This increase in the equity of their existing home helps cover the gap between their net proceeds when selling and the cost of the new home they are buying when it comes time to move," O'Dowd said. "And because it is much easier to sell than it is to buy in this market, they can time the sale of their existing condo to align with the delivery of their new construction home, by purchasing at 2017 pricing and selling at 2019 values. If trends continue, this can mean tens of thousands of dollars in appreciation of their existing condo.”
For more information on how you can earn double equity or for any other tips on buying and selling your home, please contact Realogics Sotheby’s International Realty Managing Broker, Randall O’Dowd at Randall@RandallODowd.com or by calling 206.276.3008.