Remodel or simply spruce up house?

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bestplans
Posts: 141
Joined: Wed Mar 12, 2014 4:20 pm

Remodel or simply spruce up house?

Post by bestplans »

Planning sell in about a year. Per a recent realtor evaluation my kitchen, though in very good condition with granite countertops and stainless steel appliances (except for fridge and microwave), has white formica cabinets that are now outdated and would not appeal to today's "current buyer." In addition, the kitchen tile floor is not in the best shape (scratched up). Clearly the realtor has some bias in trying to convince me to do an expensive upgrade to get the maximum price (which would still not nearly price me out of my location, which is attractive). My thinking however is to pass on the upgrades to the cabinets, floor, and fridge (all perfectly functional) which would help me maintain more flexibility in the bottom line pricing, since I assume some buyers may want to change things in any case. Instead I'd prefer to "invest" in more minor fixes such as painting the interior of some eye sore rooms and fixing my driveway (which was ravaged by winter) as they are more likely to result in the best return. Would appreciate any guidance from other Bogleheads who have faced similar fix/let go decisions in anticipation of selling, particularly if you are familiar with my real estate market (Central NJ).
supertreat
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Re: Remodel or simply spruce up house?

Post by supertreat »

Have you looked into refacing the cabinets? Costs a lot less and can change the look of the cabinets significantly.
Assets - Liabilities = Equity + (Income - Expenses)
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sdsailing
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Re: Remodel or simply spruce up house?

Post by sdsailing »

I would start by asking the Realtor for hard numbers on the proposed asking price and expected selling price (1) without and (2) with the kitchen and tile updates that he or she has suggested. Whether or not they can give a convincing answer to this question is a staring point to determine their competence to evaluate the question.

Then compare that to the estimated cost.

There are multiple ways of re-facing cabinets, from simple painting to door replacement to even more extensive options. Is painting and exterior hardware replacement an option ?
scubacat
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Joined: Fri Jul 29, 2011 6:55 am

Re: Remodel or simply spruce up house?

Post by scubacat »

As someone who is supposed to be closing on a house next week, I think you should be careful about what updates you make in the kitchen. If it needs a fresh coat of paint or old wall paper removed which is relatively cheap and can update the place then that is money probably well spent. If it is something that is not completely offensive to where people can't see beyond it, then I would think twice.

I saw a lot of houses with granite countertops some of them brand new. The problem was that sometimes I didn't like the granite chosen. It is very subjective and since the granite itself was in good condition, I would look at the kitchen, not like it and not want to spend the money replacing perfectly good countertops. Tile floors posed a similar issue. I hate tile in the kitchen as if I am doing a lot of cooking, I end up with a backache because I usually forget to where shoes until it is too late and if you drop something it shatters. Now, I know I can buy a matt (which costs money) or really make an effort to make sure that I have my shoes not so I realize that this is not an insurmountable problem. The house that I am buying has a tile floor kitchen that is only 2 years old in good shape and a neutral color so I will not be replacing it but if it had been in bad condition I would be looking at replacing it with wood.

If you go to Houzz you will see when similar questions are asked that a lot of people want to be able to customize the home to their taste and so sometimes such upgrades are not money well spent.

Just my 2 cents...
freebeer
Posts: 2014
Joined: Wed May 02, 2007 8:30 am
Location: Seattle area USA

Re: Remodel or simply spruce up house?

Post by freebeer »

Have you read about RE agent incentives in Freakonomics? They don't really have so much incentive to get you top dollar since $10K or $20K more or less doesn't hugely change their commission even though it might hugely change your net out (esp. if you have a big mortgage). What they mainly have is an incentive for quick sales (rinse and repeat). So it may be that your prospective agent thinks a kitchen update would help it sell faster, as well as for top dollar. You may want to consider whether you too have that motivation, or not. Because it's not all about the sales price it's also about time on market.
Grt2bOutdoors
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Re: Remodel or simply spruce up house?

Post by Grt2bOutdoors »

Homes that have been selling in my neighborhood in relatively fast time require no major updating. The realtors have been intentionally under pricing the home at the start to attract multiple bids from the first and "only" open house. I say "only" because those homes have been sold in the first 2 weeks of listing. Homes that require significant capital improvements have been just sitting and sitting and sitting.

A kitchen update can be significant depending on the size of the kitchen and type of cabinetry installed. I haven't seen your kitchen but if the cabinets are those white ones with the light wood inlays, then I'd agree they are outdated and will not be a selling point for a potential buyer - new cabinets are expensive! Of the homes that have sold in your neighborhood, what do those kitchens look like? Surely there must be some pictures online (gsmls.com) for your town that shows that, before the listing is taken down by the selling realtor.

In any event, good luck - buying and selling real estate can be for better use of a word, stressful.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
stan1
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Re: Remodel or simply spruce up house?

Post by stan1 »

I would definitely repair items that are damaged, such as the driveway (which will be the first thing people see). What's the condition of the roof? Is there water damage anywhere on the house? Are there electrical, plumbing, HVAC or appliance problems? Those items will come up during inspection so you'll end up dealing with it anyways. May as well get it done while you have time to shop around for a fair price because you won't have that option if work is being done quickly to close escrow. Having these problems fixed lets you have more control over the final sales price and I think you get at least a dollar for dollar return.

I'd definitely paint the house, especially if it is not painted in a light, neutral color. A light color will make the house seem brighter and bigger. To your question I would not remodel the kitchen but would look into painting it or refacing the cabinets so a buyer would think it is tolerable for a few years until they do a remodel. New knobs and handles on the cabinets can go a long way and it doesn't cost much.

Plan on a significant amount of decluttering and putting excess furniture into storage. I don't think there is any need for professional staging if you declutter and make the house feel bright.

As other posters have said Realtors aren't primarily motivated by selling the house for top dollar. They are motivated to sell it quickly which means appealing to most buyers who will walk through. Because of this motivation to sell quickly realtors will sometimes give you a slightly conservative (low) recommended listing price. To get around this add 3-4% or $10K to their recommendation and see what happens. A realtor recommended selling my mom's house for $249K after I'd put in close to $30K in repairs (it needed a new roof, carpet, paint, and had an unfinished bathroom but I left the 1970s kitchen/2 other bathrooms as is). I had her list it at $259K. It ended up selling at that price after being on the market for almost 2 months, but it was a VA loan so we paid about $10K in closing costs. The house is in a location that does not have a strong real estate market so I was quite happy with the outcome. My realtor had good advice before I reluctantly embarked on the repairs: she said buyers want the seller to pay them to do work on the house (meaning do it yourselfers want to be compensated for their time not just materials).

My advice: prepare and price the house to sell quickly. Buyer and seller realtors lose interest in the house if it is overpriced. Having the house in the MLS is a huge hassle if you are still living in it; you have to keep the house ready to show so that's motivation to have it sell quickly.
Warning: I am about 80% satisficer (accepting of good enough) and 20% maximizer
Beth*
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Re: Remodel or simply spruce up house?

Post by Beth* »

I would talk to several real estate agents before making a decision. And I would ask them to show you pictures of comparable houses in your area that did and did not sell quickly if you have not already been following the local real estate market yourself. What sells quickly and does not sell quickly is very specific to local markets so I don't think advice from a national site (such as this one) will be very helpful. It makes a big difference whether you are trying to sell a house in Palo Alto or Cleveland!
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