Perception is Reality in Real Estate

I want to throw a simple idea out to you today. If you own property and are trying to sell it, but don’t have the budget to fix the house all the way up, you’ll need to prioritize what you repair.

Now I know that is obvious, but I want you to think about this…What looks worse in the eyes of the buyer? One major problem, or 5 minor problems?

Let’s take a look at a practical situation. Let’s say that the A/C system in the house needs to be replaced, along with a few minor cracks in the sheet rock, some bad spots on the carpet, a little chipped paint on the exterior, a couple of doors that don’t close correctly, and some minor plumbing repairs.

Let’s say that the total cost to repair or replace these items is $10,000, and you only have $5,000 to spend. Let’s further say that it will take $5,000 to repair the A/C system, and $5,000 for all of the rest of the repairs.

Which should you do?

In my opinion, it is much better to complete all of the minor repairs, and leave the A/C undone.

But you may think that the A/C is a big deal, and most buyers don’t want to buy a house with a bad A/C. And you would be right about that. However, when the buyer receives the report from the inspector, which do you think looks worse to them at first glance, one line item, or five line items?

It’s kind of like when you go to court. Generally, the one who has the most evidence (i.e. the highest stack of paper) wins. It’s just the way it is.

While the A/C is a major problem, the perception that the 5 line items are a major hassle, and suggest further problems with the property, is a much bigger problem in the eyes of the buyer than one large problem, even if they equal out to the same amount of money.

It’s just how humans are. The more problems, the more we want to stay away.

What do you think? Please leave your comments below.

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