Have you ever heard the saying that “the house with the most documents wins” or gets the best value in the market? Well, it is true and here are 2 very good reasons for you to keep all of the receipts related to your home:
1) Receipts help to justify your list price to prospective buyers and
2) Receipts help to justify your contract price to an appraiser
But first, a little background information.
Keeping track of the improvements and repairs to your home can really pay off when it comes time to sell. In addition, differentiating between “improvements” and “repairs” is important. Improvements can be anything from new kitchen appliances, adding a deck, or finishing your basement. Repairs include replacing the carpet, adding fresh paint, fixing sagging gutters, replacing rotted trim around doorways – anything that is an important, but routine maintenance project. Even though these items fall into two different categories, all of these things will improve the value of your home.
Back to receipts….
#1 Helping buyers see the value of your home
Buyers want to see your home as close to model condition as possible and will form an opinion based on what they can “see.” For example, the buyers may not know that you replaced the hot water heater in the past 6 months. By documenting the date and cost of an item you replaced or repaired in your home, you can justify the list price with prospective buyers based on the value of the improvements or repairs you have completed. When we work with sellers, we ask you to provide a list of any updates or repairs along with the approximate cost and year the work was completed. We create a document based on this information and provide copies of this list for prospective buyers when they tour your home.
Buyers often decrease the amount they are willing to offer if they see the house looking run down, worn out, or out of date. If you can present an itemized list of repairs/updates/improvements in your house with the dates of completion and can provide the receipts as well, it tells a story to your buyer. It shows you were willing to invest in your home and that you cared about maintaining it. This list will help you when negotiating the contract price.
#2 Helping appraisers see the value of your home
Once you are under contract, the buyer’s lender will order an appraisal of the home. Even though appraisers work off of checklists that measure real values in a property, they also raise or lower the home value based on how sellers have cared for or neglected their properties and they credit the value based on any upgrades sellers have completed to stay in line with the market. Keeping receipts helps to quantify these repairs and improvements when it comes time to sell. When we work with sellers, we meet the appraiser at your home and we provide the itemized list and copies of the receipts. Rather than having to guess each improvement’s worth, receipts will empower the appraiser to identify the full value of a home improvement. Even if you think it’s only a small or minor improvement, you should include it.
One final recommendation: Photocopy or scan the receipts to a file so that you don’t find yourself with blank paper as the ink degrades over time.