The age-old question of which home improvements to make in preparation for selling a house or condo, is one that I answer differently than many other real estate brokers. As a stager and real estate broker, my perspective has shaped my opinion. My point of view is also born of experience, and lots of it, not only for my listing clients but from other people’s clients who have hired me for my advice before they list.
You see, it may be another agent’s opinion to rip it out and get new. I say, honor what you love about your home, and even what you don’t love, but is in perfectly good shape. In most home sale scenarios putting in new features just for resale is not a good ROI (return on investment).
I think it’s smarter to do things the buyer doesn’t want to do nor should they have to do. That means, repair broken things, clean clean clean, and stage.
Case study: empty nesters
I went on a listing appointment a few days ago. The seller is a couple whose youngest child just graduated from college and is off to live in another city. They are in that phase where they are still a bit shell shocked. The couple is going from a life centered around kids and work and on and on… to suddenly looking around and realizing there are repairs and updates that have been put on the back burner over the years. They want to sell in 12 to 18 months. It’s not their forever house but they aren’t in a tremendous rush to move on. They also know any investment in their home has to be a smart investment with resale in mind.
Repairs vs. updates
First, they pointed out to me some items that needed repair. Most notably; Their range top has no venting at all and a microwave perched just 17 inches above it. This is a code enforcement infraction. Their home is only 10 years old and this situation should not have passed code. It is also a major safety issue. Not to mention it affects how the owner’s live and operate in their home every day. The sellers have lived with it unhappily for years but this will be a big and undeniable repair to buyers. To install venting I referred them to an HVAC contractor. Yes, do this.
The other notable and necessary repair was proper support for their deck. The sellers have some doubts about the quality and efficacy of bracing and support piers under their deck. No question about conducting the repair. First step consulting with an engineer or decking contractor to fully understand and determine the repair remedy and cost.
Next, they asked my opinion about updates they were considering. They asked if they should build a garage. My question: Do you want a garage? They answered: No, we have lived here for over a decade without one, we thought this might help sell the house. The answer to this is just simple math. According to Forbes magazine, to build the shell of a garage i.e. four walls and a roof for a two car garage 440-620 sq/ft ranges between $20,000 – $40,000. This does not include garage door, electricity, windows, insulation etc. If you want any of those things keep adding. For resale purposes a garage will be very appealing to buyers but the sellers will not be able to get back their investment. There are differing opinions on this, and if you Google ROI on building a garage you will see staggering numbers in favor of this investment. I am looking at what an appraiser would value a new garage. Of course it all depends on the quality and uses of the garage, but a basic garage may add $10,000 to an appraisal. The appraisal is what determines what the lender will lend for the property. So Google searches don’t really matter. I have seen hundreds of appraisals and have never seen a garage valued for more than $10,000.
Give buyers the option
A better use of the seller’s money in the spirit of addressing a potential garage for resale would be to do all the leg work for your buyer.
- Get a survey, and share your survey with your potential buyers.
- Locate setback requirements and stake out where a garage can be built on the lot.
- Have plans drawn up for a garage.
This effort tells the buyer you understand and appreciate wanting a garage and have laid the groundwork and removed the guesswork for the buyer. This effort goes a very long way with buyers.
What about the kitchen?
The sellers also asked about renovating the kitchen. The kitchen finishes are a bit dated and “lived in” so to speak, but functioning just fine and most importantly the layout is perfect. My question; Do you want a new kitchen? They replied they would only be updating the kitchen for resale. Gotcha, don’t go to the expense of replacing the whole kitchen. The costs for finishes, trades, materials vary so greatly for a kitchen remodel it is hard to provide a baseline number, but here is what I can say for certain. The buyer would much rather be given a functional kitchen that needs updating with a sale price that considers this than a bright new gleaming kitchen that greatly increases the price and potentially this new kitchen doesn’t match the design choices the buyer would make and wants to make. The cost of renovating a kitchen is very high and can not be passed on fully through the sale price. Another area of poor ROI.
Of course every property is unique and questions like this depend on a lot of factors, including:
How long are you planning on staying in the house?
In this case, they want to put the home on the market in 12 – 18 months. Any major upgrades should first be enjoyed by the seller. Major upgrades just for resale are ill advised.
Where is the house located?
The house they are selling is generally in a fantastic location, on the edge of Myers Park, and has a good zip code for resale value. However the house is on a very busy street. If the location of a property is in an extraordinary location it may warrant major upgrades.
How much equity is in the home vs. how much will repairs cost?
This couple has decent equity in the home since they’ve been there for 10 years. However, major upgrades like full kitchen remodel and garage construction will eat through their equity very quickly.
After touring the house, familiarizing myself with the property, and hearing the sellers’ goals and timeline, I offered my advice.
Beyond these questions, in preparation to sell they are going to have a full home inspection, talk to a structural engineer about the deck supports, and spend their money on obvious repairs and safety issues.
There comes a point when making major upgrades would cost way more than just listing the house for a lower price. A lower price will attract more buyers. As long as they aren’t faced with major repairs or left with huge unanswered questions, they will go for it.
And of course don’t forget the staging. Check out my website to browse some of my projects.