The start of a new year is the perfect time for actions that will increase your property’s market value. Real estate sales activity slows and many improvement projects must be postponed during the winter months. Income tax season is just starting, and both buyers and sellers are planning for the coming spring. Here are four simple strategies that can increase your property’s resale value.
Organize Ownership Expenses
Keep a detailed record of your property’s annual expenses even if you don’t rent the property. Prospective buyers will appreciate your having an expense history ready for their review. If you do receive rental income from your property, you’ll need to have expenses itemized every year for your income tax return.
The IRS specifies which expenses you can deduct for rental properties. These generally include expenses to own and maintain the property, such as real estate taxes, repairs, management fees, utilities, insurance and supplies. Taking all allowed deductions may reduce an owner’s income taxes, making the property that much more attractive for resale.
There are many ways to organize your expense records. It can be as simple as keeping a file folder and handwritten ledger. You can create a simple spreadsheet in Excel or Apple Numbers. It’s possible to use personal accounting or small business software, such as Microsoft Money or QuickBooks, to record expenses. Or you can purchase specialized property management software. Whatever method you use, be consistent and to keep all receipts to prove your expenditures.
Check Up on Your Real Estate Assessment
Another way to make your property more saleable is to be sure that your property taxes are fair and comparable to those of other properties. Review the assessor’s description of your property to verify that you’re not being taxed for features your property doesn’t have.
You can compare your property taxes with those for similar properties by researching tax records kept by your local treasurer or tax collector. You can use this public record information to your advantage.
Have all your research materials organized and ready when the next assessment/tax notices arrive. The faster you address any issues, the easier it will be to work with local authorities to reduce your tax burden.
Consider Improvement Projects to Boost Property Value
Winter months are a great time to plan improvement projects. First, be sure the basics are covered. Look at your property as if you were a potential buyer. Is the property clean? Are touch-ups, like painting, needed? Is the landscaping tidy? Are there minor repairs to be done?
For bigger projects, like remodeling or new construction, keep in mind that what you spend may not be totally recovered in a resale price. Buyers value some improvements over others, and buyer trends change over time. Sources like Consumer Reports and Realtor.com publish articles every year to report which improvements add the most value.
Keep in mind that buyers may not share your taste when it comes to style, materials and color. For investment purposes, the most valuable improvements are those that are mainstream. If you absolutely want something out of the ordinary, know that your enjoyment of that feature will be part of your pay-back, rather than increased sale price.
Shop the Competition
A surefire way to ensure your property’s marketability is to compare it with others that are listed for sale. Be on the lookout for “for sale” signs in your neighborhood. Review local publications and flyers for houses for listings. You can verify actual sale prices through your assessor or clerk/recorder. Sale transactions are also public record.
Do visit open houses in your neighborhood. Professional real estate agents know that prospective buyers often are friends or relatives of neighbors. Talking to an agent might gain you some valuable information about the market for your property. The agent will see you as a possible future listing client. Pay careful attention to features in a listed property: these can suggest which would be the best improvement projects for your property.
An accurate history of property expenses can both reduce income taxes and help future buyers. Reduce your ownership costs by making sure that your property is assessed and taxed fairly. Plan improvement projects now. Be sure the property is clean, fresh and in good repair. If you’re considering a major improvement project, will it bring you an equitable return on its cost? Keep an eye on the market for your property. Take note of “for sale” signs in your neighborhood, as well as listings from local brokers. Visit open houses in your neighborhood: how does your property compare? Together, these strategies can earn you a higher sale price when you’re ready to sell.