June 26, 2019<\/p>\n
by Danielle Braff
\nAs modest increases in inventory begin to attract more buyers to the market, it may seem wise for your sellers to undertake renovation projects to boost their competitive edge. Kitchen and bathroom upgrades, for example, are among buyers\u2019 most desired features and can fetch a handsome return on investment, according to the National Association of Home Builders. But even as remodeling demand rises\u2014the NAHB predicts home improvement activity will jump 1.6% and 1.1% in 2019 and 2020, respectively\u2014some real estate professionals aren\u2019t sold on the idea that renovating always fast-tracks a home sale.<\/p>\n
There are two types of homes that sell quickly in today\u2019s market: fixer-uppers and completely renovated properties, says Blayne Pacelli, a sales associate with Rodeo Realty in Studio City, Calif. You\u2019ll need to pay attention to local market dynamics to determine the salability of each type of home in your area. For example, if your market has an abundance of investors, who typically renovate anyway for flips or rental properties, your sellers may not need to upgrade their homes in order to sell. Traditional buyers, however, may want a move-in\u2013ready property.<\/p>\n
In the Los Angeles neighborhood where Pacelli works, investors and traditional buyers are both aplenty. His renovation advice to clients depends on each one\u2019s situation. \u201cIf a house is already fixed up except, say, one bathroom, I would suggest updating that bathroom to [appeal to a wide market],\u201d he says. \u201cIf the bathrooms and kitchen need updating, I would leave them as is\u201d and market the home to investors.<\/p>\n
Weighing Your Options
\nThere\u2019s no doubt that home improvement increases property values, but renovating can be expensive\u2014and there\u2019s no guarantee your clients will recoup all of the costs at resale. With that in mind, you must help your clients decide: Is the expense of remodeling worth it? Small improvements rather than large-scale projects may suffice. \u201cTiming matters as does the cost to renovate,\u201d says Elisa Uribe, a sales associate with Golden Gate Sotheby\u2019s International Realty in Oakland, Calif. \u201cIt is a seller\u2019s market in our area. In some cases, minor changes such as interior and exterior painting and updating the landscaping can add a lot of curb appeal and make the house more appealing to a buyer.\u201d<\/p>\n
Uribe has also used virtual staging to present renovation options to buyers, relieving her seller of having to do the work. In March, she sold a client\u2019s unrenovated three-bedroom, one-bathroom home, built in 1910, at the list price of $564,000. The sale occurred even though the seller had not updated the property\u2019s exterior siding, windows, landscaping, and hardwood floor finishes.<\/p>\n
The buyer was attracted to Uribe\u2019s virtual staging of the home, which showed what it would look like with the updates and new furniture. Uribe also virtually staged the home\u2019s layout with an additional bathroom to show buyers the renovation possibilities. \u201cMy client was out of state and didn\u2019t have the time, or the funds, to update the house himself,\u201d Uribe says. \u201cThe buyer was an investor who planned to update the property and put it back on the market fully renovated.\u201d<\/p>\n
Less Is More
\nSometimes, some form of home improvement is necessary to elevate the profile of an otherwise undesirable property. In these cases, it may be best to choose simple projects with big impact, such as refreshing the paint or hardwood finish. James McGrath, co-founder of Yoreevo LLC in New York, says one of his buyers recently closed on a condo that had been extensively renovated. The seller, an interior designer, saved money by designing the remodeling projects herself, but she still spent $100,000 on the actual work, which included gutting the kitchen and bathroom among other changes, McGrath says. \u201cIf it\u2019s not the highest price per square foot in the building\u2019s history, it\u2019ll be pretty close,\u201d he says of the deal.<\/p>\n
The renovated unit received a lot of foot traffic, with 60 to 70 showings. \u201cThat being said, the owner won\u2019t make money on the renovation,\u201d McGrath says. Though the renovation generated a higher price for the condo\u2014which McGrath\u2019s client bought for $690,000\u2014 it wasn\u2019t enough to cover the seller\u2019s remodeling costs, he adds. This is an example of why McGrath suggests that homeowners avoid big projects prior to selling.<\/p>\n
Another renovation con: While the improvements may be a hit with some buyers, others may have different preferences and won\u2019t pay a higher price for the work that was done. In fact, McGrath\u2019s buyer brought in his own contractor because he wanted to replace the tile in the kitchen and backroom. Though the tiles were new and in pristine condition, the buyer had a different vision for the space, McGrath says. \u201cPresumably, the seller would have gotten the same offer from [my buyer] had she not spent thousands of dollars on those tiles.\u201d<\/p>\n
Protect Clients\u2019 Bottom Lines
\nYou can help keep your sellers on budget by reminding them that \u201crestoring the home to a good state of repair\u201d is all that\u2019s necessary before listing, says Michael Edlen, SFR, a sales associate at Coldwell Banker Pacific Palisades in Pacific Palisades, Calif. But that may mean something different in each market. In areas where buyers have the advantage, a seller may need to do more work on his or her home. \u201cIf an owner does not perform basic repairs, many buyers tend to \u2018horribilize\u2019 what they think they see and how much it could cost to fix it.\u201d<\/p>\n
If your client\u2019s home needs an overall update, focus on the smallest items that have the biggest impact first and test it on the market before deciding to invest in larger projects. Updated light fixtures and window treatments, which are eye-catching accents, are often enough to move buyers, says Dawn Levy, a sales associate with Berkshire Hathaway HomeServices Georgia Properties in Atlanta. If your clients want to take it a step further, they can install new energy efficient windows, which can be costly but is a huge selling point with buyers, Levy adds. \u201cA home with good bones that needs a cosmetic facelift is much more appealing to buyers,\u201d she says. \u201cPrice point also plays a role here.\u201d<\/p>\n
Of course, the value of any renovation depends on your market. What works in one area may not work in another, so you must be knowledgeable about your specific neighborhood. In New York, for example, condos and townhomes that aren\u2019t completely renovated typically don\u2019t get much attention from buyers, says Eric Rosen, a broker with Halstead Manhattan LLC. \u201cIf the apartment or townhouse requires work, then the seller would be penalized,\u201d he says. \u201cThis means that the property will trade for less than the repairs would have netted in a sale.\u201d<\/p>\n
Danielle Braff
\nDanielle Braff is a freelance writer, living in Chicago with her husband, two daughters, two cats, and a dog. Learn more about her at DanielleBraff.com.<\/p>\n","protected":false},"excerpt":{"rendered":"
June 26, 2019 by Danielle Braff As modest increases in inventory begin to attract more buyers to the market, it may seem wise for your sellers to undertake renovation projects to boost their competitive edge. Kitchen and bathroom upgrades, for example, are among buyers\u2019 most desired features and can fetch a handsome return on investment, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-571","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/householdrealestate.com\/a\/charliecook\/wp-json\/wp\/v2\/posts\/571","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/householdrealestate.com\/a\/charliecook\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/householdrealestate.com\/a\/charliecook\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/householdrealestate.com\/a\/charliecook\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/householdrealestate.com\/a\/charliecook\/wp-json\/wp\/v2\/comments?post=571"}],"version-history":[{"count":0,"href":"https:\/\/householdrealestate.com\/a\/charliecook\/wp-json\/wp\/v2\/posts\/571\/revisions"}],"wp:attachment":[{"href":"https:\/\/householdrealestate.com\/a\/charliecook\/wp-json\/wp\/v2\/media?parent=571"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/householdrealestate.com\/a\/charliecook\/wp-json\/wp\/v2\/categories?post=571"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/householdrealestate.com\/a\/charliecook\/wp-json\/wp\/v2\/tags?post=571"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}