Here's the Type of Home That's Still Selling for Over Asking Price

Having nothing more to do than move in is a beautiful thing.

After two years of a scorching-hot housing market, a correction may be around the corner. There's been a decline in total home sales due primarily to rising interest rates. And while list prices continue to climb, many sellers have been forced to drop their prices.

According to Wendi Boudreau, a Realtor with Keller Williams in Simi Valley, California, there is one type of house that continues to sell: turnkey homes.

What's a turnkey home?

A turnkey home is move-in ready. It requires no major repairs or improvements and may only need a fresh coat of paint if the buyers prefer another color. In other words, once they have the keys, a home buyer can move in and begin living without making any upgrades.

For buyers, who are already strapped by mortgage rates that have doubled over the last year, a turnkey home saves money and prevents headaches. Buyers appear willing to pay top dollar for the privilege of moving into a home they don't have to fuss over any time soon.

If you're selling your home and are concerned you might have to drop the price, there are things you can do to make it move-in ready.

Who's looking for a turnkey home?

According to HomeLight, buyers are willing to pay a premium for a turnkey home. While that may seem counterintuitive in an already-expensive market, there are a number of reasons buyers would prefer to purchase a move-in-ready property.

• Buyers on a budget: Some buyers would rather pay more upfront than worry about replacing the electrical system or repairing wood rot after move-in day.
• Buyers who lack confidence: Say a buyer walks into your home and sees that it's perfectly decorated. There's not a thing out of place, and they can immediately imagine living there. If they don't have confidence in their own ability to make tasteful upgrades, they'll likely be willing to pay more for your property.
• Real estate investors: A busy real estate investor may like the idea of buying your home as is. That way, no time (or money) is spent getting the property up to snuff, and they can immediately allow tenants to move in and get the cash flow started.

How to create a turnkey home

Even if your home isn't move-in ready today, there are steps you can take to make it shine. Doing so does not have to be a hassle or drain your bank account.

Your first step is to determine your potential return on investment. Quoting property management company Seabreeze, Clever Real Estate says that turnkey homes can sell for 5% to 25% more than surrounding properties in need of TLC. For the sake of this illustration, let's assume that a turnkey home in your neighborhood sells for 10% more than the competition.

What buyers are looking for

This list should give you a sense of the types of features buyers consider turnkey:

• Spotless interior
• Freshly painted, neutral-colored walls
• Gleaming hardwood floors and/or clean, freshly vacuumed carpet
• Plenty of storage space, including closets and cabinets
• Newer model kitchen appliances
• A recent home inspection
• Great curb appeal: no weeds in sight; and plants, bushes, and trees are groomed

Make a list

Let's say you've walked through each room and determined your home checks all the boxes but a few. You make a list of anything that won't be viewed as move-in ready. Here's what you come up with:

• Daughter's bedroom is painted lime green and full to the brim with furniture and toys
• Living room and dining room can use a fresh coat of paint
• Basement is dusty and disorganized
• Cabinets throughout the home are cluttered
• Bedroom closets are overflowing with clothes and personal items
• Dishwasher is on its last leg and sounds like a small jet as it starts up
• Hardwood floors in common areas of the house are scratched and dented
• Windows are dirty
• Bushes need to be trimmed around the house and fresh annuals should be planted

Add up expenses

Now that you know what it will take to make your home turnkey ready, add up the total estimated cost. For example:

• Estimated cost to have three rooms professionally painted (based on 550 square feet of wall space at $5 per square foot): $2,750
• Cleaning and decluttering of all rooms, closets, and cabinets: $0 if you do it yourself
• Carpet in bedrooms and family room professionally cleaned: $600
• Hardwood floors professional refinished in kitchen, living room, and hallway: $5,000
• New dishwasher installed: $1,000
• Professional window cleaner: $200
• Trimming the bushes and planting annuals: $200 if you do it yourself

All together, you see that it will cost around $9,750 to make your house stand out as move-in ready.

Determine return on investment (ROI)

Once you know about what you'll be spending, compare that to how much more you're likely to receive for a turnkey home. Again, we'll assume that your home sells for 10% more than neighboring homes requiring TLC.

If other homes in your area are selling for around $385,800 (the expected median home price in 2023), that means that you're likely to receive an offer of $424,380, or $38,580 more than homes that aren't move-in ready.

Once you subtract the amount you spent to get the house ready, you're left with an extra $28,830 to put into another home or invest for the future.

Of course, if the amount it will cost to make your home move-in ready is higher than what you're likely to get for the house, the decision is easy. In that case, you may just want to do a thorough decluttering and deep cleaning and call it good.

At the end of the day, your goal is to make your home attractive enough to inspire a potential buyer to take a mortgage out on it.