Cost of updating and remodeling

In response to a clients question about how the cost of repairs/updates to a home built in 1979, I provided the following insights, questions and recommendations.

As I read your email, a couple of thoughts come to mind. First thing, your home will sell. How long it will take and what the sale price will be, I wish I had a crystal ball. But, unfortunately, I don’t. When we started, I think I was reluctant to get too many things started for somewhat different reasons then what you’ve alluded to in your email. My concern was, once you get started, were do you end. And what do you have when you do finish.

Without any work being done to the home, despite the hole in the dining room carpet, the house is totally livable. The cleaning was necessary and painting would probably help. But, beyond that, it seems that you could get into too many personal preferences and faced with the ongoing questions of “what would yield the great benefit?”

Whether I agree or not, regardless of the age of a home, today’s buyer hopes to find a home that looks new and modern inside. Anything that differs is considered dated; out-of-date if you will. Buyers want ceramic tile floors, vinyl insulated and tinted windows, hardwood floors, new carpet and granite slab countertops surrounded by new & modern kitchen cabinets with stainless steel appliances. The problem is, if you put new floors in the kitchen and a prospective buyer wanted to redesign the kitchen, the value of that new floor is essentially lost. What if they preferred ceramic tile over vinyl? It’s a paradox! On the one hand new floors make it look nicer, but if it really isn’t what the buyers would choose, the value of the new floors could be minimal. While all of this is true, the other fear I have is, if you make the floors look good, what about the counter tops and the flaking wallpaper. But if you think about the countertops, why don’t you just do the cabinets to begin with.

Yes, I have spent a lot of time considering everything that could be done; $20,000 –to- $30,000 or more could easily be spent. Sometimes I just wish I had a crystal ball where I could predict with certainty which things would prove to be most beneficial and would help sell a home faster. Some sellers are evening spending thousands of dollars to stage their homes hoping to make them look more appealing and livable.

Now, four years ago, if I were faced with the same questions, there would be no hesitation. Yes, do everything and you’ll get all of your money plus a handsome profit back in return. But, as the market has changed, I’m uncertain if the same could be said today. Actually, I don’t think it could.

But, all of these questions and possible actions or inactions do have an impact on the price a buyer is willing to pay for a home. I recall we talked a bit about some of that when we originally put her home on the market. And, with everything going on in the national economy and the new listings and price reductions which have occurred in the past 20 days, it is evident that our market and the homes we find ourselves competing with for a limited number of buyers has changed dramatically. I’m not saying the changes are negative; now we just have more competition in the $300,000 price range then we had before. As an illustration, I called a agent who had just listed a newer similar rambler for $300,000 and asked her about price. Basically, like I had told you when we listed the home, she said, “I wanted to be under anything else that was remotely comparable in the area.” And, with buyers preferring homes they perceive as the best value, it becomes my responsibility to try and interpret all of this and relate it to you in a meaningful way.

Honestly, this has become the most difficult part of my job. Sellers’ don’t want to hear about market changes or flexible marketing plans, they want their homes sold. This is probably why I’m taking so long to answer your question and I apologize. There are no simple answers.

At this point I would say, aside from possibly getting the interior painted, my best advice would to be to able to be flexible with the price and offer to credit prospective buyers with replacement carpet and vinyl costs.

Again I apologize for taking so long to get to the point.

As you have questions, please don’t hesitate to contact me.

Sincerely,

Ken Thiemann, Real Property Specialist & Consultant
Windermere RE / Paragon Co.
(253) 370-5626