Downsizing - How much to invest in a house before selling?

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
Post Reply
Topic Author
SoDakJeff
Posts: 81
Joined: Mon Mar 13, 2017 11:48 am

Downsizing - How much to invest in a house before selling?

Post by SoDakJeff » Wed Dec 13, 2017 10:00 am

My wife and I are in the process of getting rid of some of our accumulated junk with the idea of downsizing to a newer, smaller, more "user-friendly" house (ranch vs current split level). Our project has opened our eyes to some of the maintenance that we've deferred over the years. For instance - The place could use new carpet. It definitely needs new kitchen flooring. The interior hasn't had an updated paint job in a long, long time. When we bought this place, the fourth bedroom was unfinished and we've been using it as an office/storage room, and it probably should be upgraded to the bedroom it was supposed to be. The main floor bathtub/shower is looking pretty dingy. There are a number of other, mostly cosmetic updates that could also be made.

I guess our question is this: How much money should a person invest in a house that is going to be turned over to a new owner? Is it better to ask less for the house and let the new owners put in carpet, paint, flooring, etc. to their liking rather than us doing it and finding out that potential buyers don't like what we've done? I know we're going to have to put money into the place to get it show-ready. But I keep reading that even the biggest remodels (kitchens, bathrooms - which I'm not going to do) only have an ROI of about 75%, so is it better to lose money by fixing things up, or by going for a lower asking price?

Thanks for your perspective on this.

User avatar
jfn111
Posts: 1096
Joined: Fri Nov 08, 2013 10:42 pm
Location: Minnesota

Re: Downsizing - How much to invest in a house before selling?

Post by jfn111 » Wed Dec 13, 2017 10:18 am

It really depends on the market you're in. If there are a lot of similar houses that aren't selling fast, that have been updated, then you will need a substantial price reduction to get it sold. Obviously if you're in a market like San Francisco that won't be the case.
General rules-
Paint and carpet go a long way.
Freshen up the kitchen and bathroom. Sometimes this can be as simple as a good cleaning.
If the HVAC systems are older offer a 1 year home warranty.
Finishing the 4th bedroom may make sense depending on the demand for 4 bedroom houses and the price premium.
Talk with a couple of Realtors who know your local market and get their ideas.

barnaclebob
Posts: 4004
Joined: Thu Aug 09, 2012 10:54 am

Re: Downsizing - How much to invest in a house before selling?

Post by barnaclebob » Wed Dec 13, 2017 10:27 am

Is the carpet a bad style or does it just need a cleaning?

How much you can do also depends on the price of the house? Is this a starter house with buyers who likely wont have a lot of extra cash to do upgrades or is it more expensive where a buyer might not mind hiring painters and putting in new carpet before they move in?

bloom2708
Posts: 7104
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Downsizing - How much to invest in a house before selling?

Post by bloom2708 » Wed Dec 13, 2017 10:33 am

Your realtor should be able to help. A carpet allowance for the new buyer would let them pick the color. Same for paint.

You might paint all the walls white and the new owner wants color or vice versa.

I would focus on cleaning and de-cluttering. Let the realtor help decide. In a slower/smaller market, you may have to do the upgrades. In a bigger market, it may be best to not do them. Let the new owner do it to their style.
"People want confirmation, not advice" Unknown | "We are here to provoke thoughtfulness, not agree with you" Unknown | Four words: Whole food, plant based

adamthesmythe
Posts: 3096
Joined: Mon Sep 22, 2014 4:47 pm

Re: Downsizing - How much to invest in a house before selling?

Post by adamthesmythe » Wed Dec 13, 2017 11:00 am

Remove the carpets if hardwood underneath. If not: clean the carpets, and fresh neutral paint will pay off. Anything else is a maybe. Minimal furniture. Forget allowances, etc. just price attractively.

Even if buyers don't like the colors new paint makes the place look clean.

Improved bathrooms and kitchen help sell a house but are not likely to pay off.

> You might paint all the walls white

Neutral, but not white. White is too sterile-looking. And no sloppy paint jobs, that may be a negative because if will need extra work to repaint.

User avatar
patriciamgr2
Posts: 800
Joined: Mon Nov 19, 2007 3:06 pm

Re: Downsizing - How much to invest in a house before selling?

Post by patriciamgr2 » Wed Dec 13, 2017 11:54 am

Realtors will always advise spending money because it makes their job easier. I suggest that people ask is "What is the house worth right now in its current condition? If I spend $X dollars on [specific project], can you sell it for at least $X more than what it's worth now?" If you're home is in a decent seller's market, you should be able to sell quickly without spending a lot of money.

I agree with earlier poster, if your home is a starter, you'll need to do more because people buying those homes don't have cash on hand to do upgrades. It's been a few years since I've fixed up homes for resale, so you'll need to check with a realtor on whether cash allowances (for replacing appliances or carpet) cause any issues with getting a mortgage for the full sales price.

Key point: I'm repeating what other posters have mentioned, but it's so important. Your home needs to be ruthlessly decluttered and sparkling clean. You want all appliances & bathroom fixtures to look as clean as if they've never been used even though they may look & be old. [The way we all live is not the way you show a house to sell it for top dollar.]

I'd suggest washing down walls (with TSP or similar, gentler solution) before paying for paint unless your home has non-neutral colors.

If your carpet has pet staining, those odors don't always get removed by carpet cleaning. If you've got decent hardwood underneath, by all means remove carpet & get floors done. If not, I'd clean carpet to see how it turns out. Clean the carpeting even if you're offering a replacement allowance. Sense of smell matters a lot. Pet owners aren't able to detect those, but they're a negative for buyers. Get someone to give you an honest opinion on whether the home smells fresh.

Before you have a realtor over, go through your home with a video camera. You'll be astonished at how much "stuff" is still there blocking the potential buyers' view of what they're buying (the square footage). The good news is that decluttering to sell gives you a headstart on the downsizing.

Good Luck & Best Wishes

User avatar
Watty
Posts: 18114
Joined: Wed Oct 10, 2007 3:55 pm

Re: Downsizing - How much to invest in a house before selling?

Post by Watty » Wed Dec 13, 2017 12:02 pm

It really depends on your local market and even the price range within the market.

As a general rule if something is actually broken or completely worn out it is almost always a good idea fix it since many buyers will overestimate what the repair might cost and it will make the house seem poorly maintained. The big exception is if the house is in such bad shape overall that it will likely be sold to a flipper.

You almost never get your money back(or even half your money) by doing upgrades like remodeling a bathroom or kitchen.

I would not spend more than 1% of the value of the house in doing things like painting unless your real estate agent could make a good case for it.

A huge risk is that if you do any upgrades you will be tempted to do them cheaply and your taste may not match potential buyers.

I know of one house where they put in new carpets and the first thing the buyer did after they bought the house was to have the carpets ripped out and have hardwood floors installed before they moved in. When we were remodeling our house one thing that we found was that putting in hardwood floors was only a little bit expensive than putting in decent new carpets so don't automatically put new carpets in.

You will also price some potential buyers out of being able to afford your house if you spend a lot on improvements. The first house I bought was actually a bit above the top of my intended price range. The house still had the original kitchen which was fully functional and in OK condition but it was badly dated had things like avocado green formica countertops and avocado green appliances. This was long after avocado green was the "in" color and the house was priced low for that neighborhood because of the kitchen. If the seller had remodeled the house and charged more for it then I would not have been able to afford to buy it. I was able to wait about five years to remodel the kitchen when I could afford it.

DarthSage
Posts: 342
Joined: Tue Sep 19, 2017 9:39 am

Re: Downsizing - How much to invest in a house before selling?

Post by DarthSage » Wed Dec 13, 2017 12:18 pm

My vote would be for you to do the inexpensive things--clean, declutter, and paint. I would only replace appliances if they didn't work.

A couple years ago, my MIL sold her house (actually a detached condo). She'd had it built 20 years before and basically did nothing to it. It was in decent shape, but the floors needed updating--her maroon rugs were faded and worn, in particular. She priced it with a carpeting allowance because she was 85 and just wanted to get on with things. In 72 hours, she had three offers--all at asking price or better.

I agree with PP's about not wanting to do too much, because it might not be to the buyer's taste. But, fresh paint looks very nice, and doesn't cost much. I would go with an off-white, light gray, something like that--call it "close to white" if you like. You want the buyers to mentally arranging their own furniture and putting their photos on the walls.

FraggleRock
Posts: 362
Joined: Sun Feb 12, 2017 6:50 pm

How much to invest in a house before selling

Post by FraggleRock » Wed Dec 13, 2017 3:44 pm

If you are using a real estate agent, ask questions and listen. Take their advice sometimes.

1. How old is the roof? Do buyers in your area demand new roofs? Do insurance companies?
If yes, then you should replace the roof as it will make the selling/sale process smoother.

2. Radon. Do buyers expect/demand radon mitigation?
If yes, then install it.

3. Declutter. That means removing at least 2/3 of your stuff.
Do you need to stage?

4. Clean. Clean again. And again.

5. Leave at least 8 minor "needs fixing" items for their inspector to find. Inspectors have to find something to justify their fee.

6. Sewer line. If the buyers will have it scoped, then you should have it rootered.

7. Make sure that curb appeal is the best it can be.
If you need to spend money on landscaping, then do it.

8. Checkout http://www.city-data.com/forum/real-estate/
Lots of great advice.

P.S. Our house went on the market in 2010 for $740K and we spent $27K on getting it ready. But, it was a 100% buyers' market then.

User avatar
Watty
Posts: 18114
Joined: Wed Oct 10, 2007 3:55 pm

Re: Downsizing - How much to invest in a house before selling?

Post by Watty » Wed Dec 13, 2017 3:56 pm

One more thought. Doing significant repairs could also delay getting your house on the market. In many areas the springtime is the prime selling seasons so one question to consider is what you can actually get done by around March 1st which is not all that far away.

If any improvements delay getting the house on the market until mid summer then you may have missed the prime selling season and the housing market could change quickly if something happens like interest rates go up.

If you will be getting a mortgage on your next house then you also need to consider that rates could change by the time you buy that house. The rate changes are impossible to predict but they are still pretty good right now.

User avatar
lthenderson
Posts: 4450
Joined: Tue Feb 21, 2012 12:43 pm
Location: Iowa

Re: Downsizing - How much to invest in a house before selling?

Post by lthenderson » Wed Dec 13, 2017 3:58 pm

I fix up houses and sell them for a hobby. In my experience, painting and cleaning the carpets are excellent investments. When I say cleaning the carpets, I am mostly concerned about removing odors versus stains using something like RugDoctor. If the stains are bad enough that one could mistake a murder scene happening there then they do need to be replaced but for a few small stains, I don't go through the trouble. All the rest of the things you mentioned will be throwing money away. The only way I would do those would be in a very slow market where the cost of hanging onto the house will exceed the cost of repairs. The other essential thing to sell a house is to clean all unpainted surfaces very well, especially in the kitchen and bathroom areas. It doesn't cost much but it makes a great first impression and gets rid of odors of the previous occupants.

User avatar
Watty
Posts: 18114
Joined: Wed Oct 10, 2007 3:55 pm

Re: Downsizing - How much to invest in a house before selling?

Post by Watty » Wed Dec 13, 2017 4:04 pm

FraggleRock wrote:
Wed Dec 13, 2017 3:44 pm
If you are using a real estate agent, ask questions and listen. Take their advice sometimes.
I would modify that to be talk with several real estate agents before picking one. The last time I sold a house I talked to about six agents on the phone then selected three to let them do a competitive market analysis presentation to me before I selected one. It was real interesting to see how much they differed both in the pricing and their approach to the market. One of the agents had sold about ten houses in my subdivision so some people considered her the be the expert. Her suggested price was more than 10% less than what the house sold for after I select another agent. You don't want to go with the agent that gives some sky high price but the agent I selected had sound reasons why she thought it could sell for that price.

I agree that once you hire an agent you should generally take their advice since you are paying so much for it.
Last edited by Watty on Wed Dec 13, 2017 4:08 pm, edited 1 time in total.

Jack FFR1846
Posts: 10812
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Downsizing - How much to invest in a house before selling?

Post by Jack FFR1846 » Wed Dec 13, 2017 4:06 pm

Depends also what the neighborhood is like. Who will the next buyer likely be. For example, if your house is in the middle of a neighborhood of trailers, you're the best house in the neighborhood. Do nearly nothing. If it's in the middle of a bunch of $2M mini mansions, it'll likely be bulldozed....again, do nothing. If all the houses were built exactly the same in the 60's, upgrade to match the rest of the houses. I never forget our first 2 house hunting experiences. $5k above our budget.....we didn't even look at the house. So if your house would pass as a starter home, consider that. Or if the selling price would perhaps be $200k and the upgrades you think are needed will cost you $125k, then just don't.

How much of the upgrades can you do yourself. If you don't balk at framing, sheet rocking and taping a new room, then putting down a wood floor, then you'll likely want to do lots of this yourself. If you pay someone to clean your carpets or fix the plumbing, you may want to consider selling it as it is.

I would ask a real estate agent for their opinion once you clear out the clutter. You do want the house to look its best before an agent is called. You want them to get the best impression possible. If it looks like a hoarder's house, it won't go anywhere. Minimalism is in now. Stuff all over window sils and filling every square inch of shelves is clutter and makes the house appear smaller.
Bogle: Smart Beta is stupid

JBTX
Posts: 5767
Joined: Wed Jul 26, 2017 12:46 pm

Re: Downsizing - How much to invest in a house before selling?

Post by JBTX » Wed Dec 13, 2017 4:11 pm

I don’t know but generally agree with the advice given here.

We just did a major remodel on about a $300k 2600 sq ft 20 year old house. Like you we had really deferred much of the maintenance other than a master bedroom remodel. We ended up spending about $80k just on the remodel (and years before about $15k on 2 bathrooms). It can get pretty expensive. Of course we could have done it for a lot less.

My best guess is it probably increased our home value $60k, based upon our initial appraisal and based upon a house down our street that is exactly like ours but completely remodeled and recently sold.

Even if you could get 100% or a little more remodels are a major PITA and I wouldn’t do it.

p14175
Posts: 375
Joined: Thu Sep 20, 2007 11:33 am
Location: Now in southeast Arizona

Re: Downsizing - How much to invest in a house before selling?

Post by p14175 » Wed Dec 13, 2017 4:14 pm

Before putting your house up for sale, get a home inspection and an independent appraisal. Between the two reports you should be able to figure out what you need to do to sell it for the best price. I wouldn't rely on a real estate agent's opinion of what should be done, but you may have to ask one for inspector and appraiser referrals. We recently sold our home of 33 years and I wish we had done those inspections before putting it up for sale.

barnaclebob
Posts: 4004
Joined: Thu Aug 09, 2012 10:54 am

Re: Downsizing - How much to invest in a house before selling?

Post by barnaclebob » Wed Dec 13, 2017 4:37 pm

p14175 wrote:
Wed Dec 13, 2017 4:14 pm
Before putting your house up for sale, get a home inspection and an independent appraisal. Between the two reports you should be able to figure out what you need to do to sell it for the best price. I wouldn't rely on a real estate agent's opinion of what should be done, but you may have to ask one for inspector and appraiser referrals. We recently sold our home of 33 years and I wish we had done those inspections before putting it up for sale.
An inspection is $300-500 and an appraisal is $500 to $750, how would you have recouped that money?

Appraisals aren't rocket science and if your realtor cant accurately price your house and tell you why then why are you hiring them?

Tal-
Posts: 464
Joined: Fri Apr 22, 2016 10:41 pm

Re: Downsizing - How much to invest in a house before selling?

Post by Tal- » Wed Dec 13, 2017 4:47 pm

This really depends on the market, and even the segment of the market. Ultimately, you need to know how much your house might sell for if one of any number of factors are done - and that's a very difficult question to answer. But, here are my thoughts - or rather my comments to get you thinking :)

What's the house worth today? Putting 15K into a 700K house is a lot easier than putting 15k into a 200k house.
You should always do quick and easy things when listing like de-cluttering. This is basically free.
Who would buy the house today? Typically, if you are selling to a family, you want to have the house fully functional, including carpet/flooring that can be used on day 1.
What would it take to sell your house to a richer family? This typically requires an upgrade that I don't advocate.
How would the work get done, who would do it, and how long would it take? If you're farming it out, are you managing the vendors? Do you know people, or are you paying Angie's List prices?
Do you have the time and money to do a repair like this? And, can you tolerate the risk of investing in a house with the hope of a positive ROI?
Can you do anything to increase the inputs into an appraisal, like adding heated square footage? This is relevant with an unfinished 4th bedroom.
Debt is to personal finance as a knife is to cooking.

FraggleRock
Posts: 362
Joined: Sun Feb 12, 2017 6:50 pm

No pre-sale inspection

Post by FraggleRock » Wed Dec 13, 2017 11:07 pm

In Colorado, I would never get a home inspection prior to listing the house.
The sellers’ disclosure form is quite invasive.
Ignorance is a defense. Lying is not.

CurlyDave
Posts: 1445
Joined: Thu Jul 28, 2016 11:37 am

Re: Downsizing - How much to invest in a house before selling?

Post by CurlyDave » Thu Dec 14, 2017 3:38 am

Think through where an agent's interests really lie.

Many people think that because an agent gets a percentage of the selling price, they automatically want to sell your house for the highest possible price. This is not necessarily true. If an agent can sell a house more quickly or with less work that is frequently more attractive to them.

Houses in very good condition sell faster, and an agent may well recommend upgrades that ultimately will cost more than they return. Cheap things you can do yourself are the best. Do all of them and be prepared to make price concessions on others, or to do them in response to an offer.

HIinvestor
Posts: 1833
Joined: Tue Apr 08, 2014 3:23 am

Re: Downsizing - How much to invest in a house before selling?

Post by HIinvestor » Thu Dec 14, 2017 4:21 am

The two houses on our street that most recently sold were both torn down! They were purchased for over $850,000 and the structures were completely removed, along with the trees and most of the vegetation! Both had habitable (though dated) homes. One if them is having a new home built on it but a guy who likes to flip houses and the other is being resold as a vacant lot. Any money put into sprucing these places up would have been totally wasted.

I admit if a house has odors, it’s a huge turn off for me and many prospective buyers. Generally paint is pretty inexpensive and a GOOD paint job with a neutral color as well as good deckuttering and cleaning can go a long way toward making a home attractive without investing much cash.

Topic Author
SoDakJeff
Posts: 81
Joined: Mon Mar 13, 2017 11:48 am

Re: Downsizing - How much to invest in a house before selling?

Post by SoDakJeff » Thu Dec 14, 2017 9:19 am

barnaclebob wrote:
Wed Dec 13, 2017 10:27 am
Is the carpet a bad style or does it just need a cleaning?

How much you can do also depends on the price of the house? Is this a starter house with buyers who likely wont have a lot of extra cash to do upgrades or is it more expensive where a buyer might not mind hiring painters and putting in new carpet before they move in?
First of all - Thanks to everyone for your input and suggestions! This has really helped me to narrow my focus on what steps we need to take.

I wouldn't call the carpet a bad style. A neutral beige cut pile upstairs in remarkably good shape for being 20 years old. The only problem area is a faint yellow stain in the living room where my dog dug an empty printer cartridge out of the garbage and chewed on it :annoyed

Here in South Dakota, housing prices are pretty low. My house could easily be a starter house for a two-income young couple, or a nicer step-up second house from a dumpier first house that a lot of people start out with. I haven't had a market analysis done yet, but I'm estimating my house should be in the $220,000 - $230,000 range.

stan1
Posts: 8036
Joined: Mon Oct 08, 2007 4:35 pm

Re: Downsizing - How much to invest in a house before selling?

Post by stan1 » Thu Dec 14, 2017 9:31 am

We sold my inlaws 20 year old house in a low cost of living area about 6 months ago. Sales price was $150K and was bought by first time buyers.
Realtor advised deep cleaning, remove but do not replace dated or broken window coverings (including all drapes), new paint, and new stainless appliances, leave all flooring as is. If there's any doubt about whether HVAC or roof will need repairs I'd get that taken care of before listing the house. That removes a major negotiating point after the inspection. Likewise if there is any water damage get that repaired. If a buyer sees water damage they will assume there are other problems.

Topic Author
SoDakJeff
Posts: 81
Joined: Mon Mar 13, 2017 11:48 am

Re: How much to invest in a house before selling

Post by SoDakJeff » Thu Dec 14, 2017 9:38 am

FraggleRock wrote:
Wed Dec 13, 2017 3:44 pm
If you are using a real estate agent, ask questions and listen. Take their advice sometimes.

1. How old is the roof? Do buyers in your area demand new roofs? Do insurance companies?
If yes, then you should replace the roof as it will make the selling/sale process smoother.

2. Radon. Do buyers expect/demand radon mitigation?
If yes, then install it.

3. Declutter. That means removing at least 2/3 of your stuff.
Do you need to stage?

4. Clean. Clean again. And again.

5. Leave at least 8 minor "needs fixing" items for their inspector to find. Inspectors have to find something to justify their fee.

6. Sewer line. If the buyers will have it scoped, then you should have it rootered.

7. Make sure that curb appeal is the best it can be.
If you need to spend money on landscaping, then do it.

8. Checkout http://www.city-data.com/forum/real-estate/
Lots of great advice.

P.S. Our house went on the market in 2010 for $740K and we spent $27K on getting it ready. But, it was a 100% buyers' market then.
We put a new roof on in 2010 due to defective shingles. Then, a few years ago, we had a big hail storm and our insurance company gave us a payout to replace the roof again. I didn't do it, because the inspector said the damage was minor (and we haven't had any problems). I put the settlement money into a MMF and plan to replace the shingles and gutters just before listing the house as a selling point.

mrgeeze
Posts: 236
Joined: Wed Nov 04, 2015 11:09 am

Re: Downsizing - How much to invest in a house before selling?

Post by mrgeeze » Thu Dec 14, 2017 12:23 pm

SoDakJeff wrote:
Wed Dec 13, 2017 10:00 am
My wife and I are in the process of getting rid of some of our accumulated junk with the idea of downsizing to a newer, smaller, more "user-friendly" house (ranch vs current split level). Our project has opened our eyes to some of the maintenance that we've deferred over the years. For instance - The place could use new carpet. It definitely needs new kitchen flooring. The interior hasn't had an updated paint job in a long, long time. When we bought this place, the fourth bedroom was unfinished and we've been using it as an office/storage room, and it probably should be upgraded to the bedroom it was supposed to be. The main floor bathtub/shower is looking pretty dingy. There are a number of other, mostly cosmetic updates that could also be made.

I guess our question is this: How much money should a person invest in a house that is going to be turned over to a new owner? Is it better to ask less for the house and let the new owners put in carpet, paint, flooring, etc. to their liking rather than us doing it and finding out that potential buyers don't like what we've done? I know we're going to have to put money into the place to get it show-ready. But I keep reading that even the biggest remodels (kitchens, bathrooms - which I'm not going to do) only have an ROI of about 75%, so is it better to lose money by fixing things up, or by going for a lower asking price?

Thanks for your perspective on this.

Most important: Carpet, caulk and paint
Make it what it aint.


I've sold a few houses, flipped a few too. I believe you have to do whatever is necessary to make the house move-in ready.
The very last thing you want to do is give the buyer a reason to say no. Or worse, start haggling about a bathroom vanity you should have replaced for $250.

So you are probably looking at least carpet and paint.
Paint is ALWAYS 2 differing shades of white. Forget any trendy color scheme.
Carpet is always short and beige. Something that hides some stain
HVAC has to work properly, Plumbing has to be correct.
Stove has to be decent. Same with fridge and dishwasher.
If not, buy the fake stainless steel stuff closeout at your local Great Pumpkin.
Don't go overboard on flooring or countertop or cabinets. Don't go overboard on anything.
Match the house. In many cases vinyl tile (not linoleum) and formica counters is consistent with the house.
Nobody really pays you for extras. But they will penalize you for not enough.

Best thing you can do is empty out all your stuff if possible. Even if you stow it in the garage or basement.
Get everything you can out of the living/sleeping space


Somethings I have found work great is replace every switch plate in the house with brand new ones.
They cost $.50 each and do make a difference. Better looking than just hitting them with paint.
I also change EVERY interior door handle. You can buy brand new brass looking ones for about $15 each.
They look fantastic.
Often I'll buy light fixtures from the odd lots at the hardware store. You can get them for $10-15 sometime.
Its pretty easy to change them yourself without electrocution.
You'd be amazed how much better they make the place look

Enough

User avatar
Sandtrap
Posts: 8690
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

Re: Downsizing - How much to invest in a house before selling?

Post by Sandtrap » Thu Dec 14, 2017 1:43 pm

adamthesmythe wrote:
Wed Dec 13, 2017 11:00 am
Remove the carpets if hardwood underneath. If not: clean the carpets, and fresh neutral paint will pay off. Anything else is a maybe. Minimal furniture. Forget allowances, etc. just price attractively.

Even if buyers don't like the colors new paint makes the place look clean.

Improved bathrooms and kitchen help sell a house but are not likely to pay off.

> You might paint all the walls white

Neutral, but not white. White is too sterile-looking. And no sloppy paint jobs, that may be a negative because if will need extra work to repaint.
Like selling a used car, spend minimally, make it clean and presentable, but don't go overboard. Otherwise it's like putting gold rims and tires on a Ford Pinto. You will only get so much for it no matter what.
:D
Wiki Bogleheads Wiki: Everything You Need to Know

Rupert
Posts: 4122
Joined: Fri Aug 17, 2012 12:01 pm

Re: Downsizing - How much to invest in a house before selling?

Post by Rupert » Thu Dec 14, 2017 2:22 pm

Deep clean everything. I'd hire a service. Sometimes when you've lived in a house for a while, you can't see the dirt anymore. Buyers will see it though. As for upgrades, size up the competition. Spend a few weekends going to open houses for comparable homes. Either do the upgrades that will bring you in line with most of those houses re countertops, flooring, etc., or prepare to lower your price.

User avatar
Sandi_k
Posts: 1169
Joined: Sat May 16, 2015 11:55 am
Location: SF Bay Area

Re: Downsizing - How much to invest in a house before selling?

Post by Sandi_k » Wed Dec 20, 2017 6:38 pm

We sold in 2011, where it was a buyers' market. We could have done nothing to the house we'd bought as a probate sale in 1992, and we would have been competing with all the foreclosures on the block.

Instead, we decided to DIY a lot of elbow grease and cosmetic upgrades. We got a realtor and a stager/designer to give us focused advice, and it helped enormously. What we did:

- Rented a storage locker, and moved out our wall-to-wall bookshelves, and all books.
- Removed heavy drapes, and left only beige-colored Roman shades.
- Professionally cleaned the carpet in the main hallway and bedrooms.
- Replaced the laminate kitchen countertop with a quartz slab from the local cheap granite shop. Cost $1600 and was one thing that sold the house, when we met the buyers.
- Ripped up the carpet in the LRm/DRm and repaired/refinished hardwood floors. $6k, but it was the other thing that sold the house.
- Cleaned all windows, and all light fixtures.
- +1 to replacing all electrical and light switch faceplates. A stunning, effective, subtle detail.
- Repainted the bathroom, and refinished the tub.
- Removed the burglary bars from the first floor windows.
- Added vinyl flooring to laundry room and stairs to the downstairs area.
- Tiled the half bath and entryway from the backyard. Cost $300 and was a huge "bang for the buck."
- Ripped off 1950's paneling in the downstairs and laundry room. Hired a sheetrock crew to hang, tape and mud the walls; we then primered and painted it a cafe au lait color. Cost $2k and lightened up the dingy walkout basement dramatically.
- Replaced 1950's wagon wheel lights with simple light fixtures in the walkout basement.
- Jack hammered almost all of the concrete in the backyard, and replaced it with two raised garden beds and some sod. Much more appealing with greenery.

All in all, we spent about 5% of the value of the house on the cleaning, painting, decluttering, and upgrades. The expensive part was the "natural stone countertops" and "hardwood floors." And yet - when we had friends go spy on the Open House for us - that was what EVERY friggin' buyer commented on. Having it done already really increased the foot traffic, and we sold the house in the timeframe we wanted to.

User avatar
tennisplyr
Posts: 2400
Joined: Tue Jan 28, 2014 1:53 pm
Location: Sarasota, FL

Re: Downsizing - How much to invest in a house before selling?

Post by tennisplyr » Wed Dec 20, 2017 6:48 pm

I sold my house last year and essentially spending nothing to upgrade. Here are a few things I did do:

-decluttered
-mowed the lawn and put in a few flowers
-removed weeds from my driveway
-painted the outside

I was determined not to spend huge amounts of money to make changes. We got what the house was worth in 5 weeks, in retrospect we did the right thing for us.
Those who move forward with a happy spirit will find that things always work out.

tibbitts
Posts: 9412
Joined: Tue Feb 27, 2007 6:50 pm

Re: Downsizing - How much to invest in a house before selling?

Post by tibbitts » Wed Dec 20, 2017 7:28 pm

My guess is that generally, if your house needs some updating, the bottom line is that if you can do the updates for one-third to one-half of retail price or less, you stand a good chance of getting back what you pay for the updates, or more, and are likely to sell more quickly. If you're going to pay retail let somebody else do it.

Mike Scott
Posts: 1342
Joined: Fri Jul 19, 2013 2:45 pm

Re: Downsizing - How much to invest in a house before selling?

Post by Mike Scott » Wed Dec 20, 2017 7:44 pm

You almost never get the remodel costs back in the sale but then you may have trouble selling it without some work even at a discount. And of course it depends on your local market and time of year and how quickly you need to sell it.

hoops777
Posts: 2765
Joined: Sun Apr 10, 2011 12:23 pm

Re: Downsizing - How much to invest in a house before selling?

Post by hoops777 » Wed Dec 20, 2017 8:24 pm

Isn’t this why you are paying a realtor?It all depends on the unique circumstances of your neighborhood.There was a lot of good advice offered here,but it depends on your exact situation.Hire a good realtor and listen to what they say.If they want you to spend a lot of money,nail them down very clearly as to why and how it will make you more money.
K.I.S.S........so easy to say so difficult to do.

gouldnm
Posts: 569
Joined: Sun Nov 29, 2009 8:54 pm

Re: Downsizing - How much to invest in a house before selling?

Post by gouldnm » Thu Dec 21, 2017 5:37 pm

My husband and I will be in a similar situation in a few years. Our problem is that we live in a townhome and the person next to us refuses to maintain her home. So even if we put a lot of money into upgrades, there's still a chance that any potential buyers will be turned off by our neighbor's house. Plus the market is relatively slow, and the townhomes that have been listed in our development tend to sit on the market forever.

We are considering putting up our house for auction. You don't need to do ANY repairs, you can determine the time you want to sell it, and you can determine the minimum bid, if that's a concern.

What convinced us to look into auctioning our home was when we saw what another townhome in our development went for when the owner went bankrupt. The house sold for about $160K at auction, which was about $60K below the going rate. But then the owner didn't have to deal with the hassle or expense of doing repairs.

Disclaimer:
Every situation is different, every market is different. If you think that painting and new carpet and a few easy repairs will make your house sell a lot faster, it's probably worth it. But if you live in a slower market, and you want to get rid of your house in a hurry, you already have a lot of equity in your home, and you really don't want to deal with the hassle of repairs (especially if there's no guarantee that you'll get your money back), it may be worth it to look into auctioning your home as an option.

Mingus
Posts: 696
Joined: Fri Apr 19, 2013 2:25 pm

Re: Downsizing - How much to invest in a house before selling?

Post by Mingus » Thu Dec 21, 2017 7:38 pm

Myself personally, I'd rather buy a house that needed the walls painted rather than buy a house that had a "quick me cover up" paint job. Same for kitchen flooring and carpet. Would much rather move into a home that was extremely clean than covered in cheap white paint, and cheap beige carpet.

Depending on your locale, the market should be good enough that you don't have to sugar coat some out of date finishes. But discuss this with your agent. Then price the house accordingly, or offer a rebate to the buyer after closing so they have cash to work with to cover the cost of carpet, paint, etc.

User avatar
patriciamgr2
Posts: 800
Joined: Mon Nov 19, 2007 3:06 pm

Re: Downsizing - How much to invest in a house before selling?

Post by patriciamgr2 » Fri Dec 22, 2017 1:20 pm

Gouldnm: I am responding to the concept of using an auction to sell a hard-to-move property. [BTW, I don't think this is the case with the OP.] I believe you have advocated this on the Forum in the past as well; the responses you received then are still relevant.

All real estate is local. In the markets in which I've owned and sold property, however, auctions did not NET the owner what I would view as the best price. There are significant auction fees and (in the case of firms operating in areas with which I am familiar) many expenses are charged against proceeds; the buyer's premium also goes to the auctioneer not the seller. Auctions may be useful for unusual, higher-end properties which need regional or nationwide visibility to find the one buyer who would be interested. Auctions also move blocks of lower-end properties (e.g. groups of condos) quickly.

In the situation you describe, where the outside of your home is less desirable than the inside, even auction buyers will view the development (maybe by using google earth or something, but more likely by sending someone local to take photos/video). So, I don't think an auction will help you sell.

I don't think it makes sense at all for the OP based on the facts presented. Everyone selling wants a quick deal at a great price. If a seller insists on the sale being fast & refuses to make any effort (e.g. decluttering and extreme cleaning, including addressing any pet odor issues), price is typically much lower. I think most of the posts above are advocating making a strong effort on the low-cost "fixes" as a way to find the optimal sales strategy.

Good Luck to all.

momvesting
Posts: 104
Joined: Tue Apr 12, 2016 9:18 pm

Re: Downsizing - How much to invest in a house before selling?

Post by momvesting » Fri Dec 22, 2017 2:46 pm

I think your timeframe and how much you can do yourself are the two main issues. For example, my husband and I are good, careful painters, so in our old house and our current one we have done all of our own painting. If you can do that then the cost is negligible compared to the result, but hiring professionals for a $250k house may not be cost effective. If you do paint, some of the biggest impact isn’t from painting the walls, but from painting baseboards, trim, shelves, and doors. This will really help your house look clean.

If you have the time, look on places like Facebook marketplace and the Habitat for Humanity stores for supplies. You can often find updated light fixtures, cabinet knobs, and tile leftovers (enough for a small bathroom) for dirt cheap at places like that. I also did pretty well at Lowe’s and Home Depot clearance, but I had ~18 months to prepare our home to sell and I was only working part-time at the time.

Good luck.

turnturnturn
Posts: 34
Joined: Mon Feb 16, 2015 4:18 pm

Re: Downsizing - How much to invest in a house before selling?

Post by turnturnturn » Fri Dec 22, 2017 6:01 pm

When we bought this place, the fourth bedroom was unfinished and we've been using it as an office/storage room, and it probably should be upgraded to the bedroom it was supposed to be.
I think you got the right idea. When potential buyers tour a house listed as four bedrooms, they expect to see four bedrooms. It'll bring a premium over "3 bedrooms + utility room". Hopefully you can do a minimal upgrade to make it presentable as a bedroom.

snowox
Posts: 309
Joined: Wed Nov 08, 2017 9:17 am

Re: Downsizing - How much to invest in a house before selling?

Post by snowox » Fri Dec 22, 2017 6:24 pm

Definitely make the 4rth bedroom a bedroom. Look online at comps in your area and see what they look like online as well as what there selling for. For the most part I agree the biggest thing is not updates but making sure things that are not working or cleaned are so. Fresh clean walls and floors. Maybe swap out a few really old light fixtures that need updating. If you know there is a problem and hope its not found it probably will be so fix it.

gouldnm
Posts: 569
Joined: Sun Nov 29, 2009 8:54 pm

Re: Downsizing - How much to invest in a house before selling?

Post by gouldnm » Sun Dec 24, 2017 7:26 pm

patriciamgr2 wrote:
Fri Dec 22, 2017 1:20 pm
All real estate is local. In the markets in which I've owned and sold property, however, auctions did not NET the owner what I would view as the best price. There are significant auction fees and (in the case of firms operating in areas with which I am familiar) many expenses are charged against proceeds; the buyer's premium also goes to the auctioneer not the seller.

In the situation you describe, where the outside of your home is less desirable than the inside, even auction buyers will view the development (maybe by using google earth or something, but more likely by sending someone local to take photos/video). So, I don't think an auction will help you sell.
I agree with you that all real estate is local, and also that my advice may not apply to the OP, which is why I put a disclaimer in my reply to the OP. Since I don't know the OP or what their exact situation is, I did want to throw the idea out there as something to consider. There are pros and cons to auctions, but auctions can be a great option if you don't want to put thousands of dollars into fixing up your home upfront (with no guarantee that you'll get your money back).

I'll also agree that auction is probably not the optimal way to get the "best" price, but that is assuming that price is the only thing you care about it. In my case, when I retire, time will be more important to me than money. I want to enjoy the few years I'll have left, not sit around waiting for my house to sell. It also helps that my house is a tiny percentage of my portfolio (less than 10%) and that I also have a lot of equity.

Regarding fees, from what I've seen, the closing costs are usually paid by the buyer, not the seller. The seller does have to put up a few thousand to pay for advertising, but that's nothing compared to what it would cost to hire someone to do a bunch of expensive repairs (again, with no guarantee that you'll get your money back). A real estate agent and closing costs can also cost you substantial fees.

The other thing is that, with an auction, you only have qualified buyers. With the conventional sales method, there's always the possibility that the deal will fall through. When my husband sold his house, the deal fell through TWICE. The deal finally closed on the THIRD try. Meanwhile, he was paying the mortgage on an empty house, which cost him thousands of dollars. So there are risks with going the conventional route that you don't have to deal with in an auction. You get what you pay for.

I also disagree that my property would not sell at auction. The neighbor on the other side of me sold his house at auction and got a reasonable price for it--one I would be happy to get for my place. That's what made me decide to look into auctions in the first place. I don't know the true market value of my house, but I do know that is has enough going for it that it will be worth something to someone.

None of what I write necessarily applies to the OP. Every market is different, every situation is different. It is very important to do your research, regardless of which method you ultimately choose.

RudyS
Posts: 1640
Joined: Tue Oct 27, 2015 10:11 am

Re: Downsizing - How much to invest in a house before selling?

Post by RudyS » Sun Dec 24, 2017 10:29 pm

Mingus wrote:
Thu Dec 21, 2017 7:38 pm
Myself personally, I'd rather buy a house that needed the walls painted rather than buy a house that had a "quick me cover up" paint job. Same for kitchen flooring and carpet. Would much rather move into a home that was extremely clean than covered in cheap white paint, and cheap beige carpet.

Depending on your locale, the market should be good enough that you don't have to sugar coat some out of date finishes. But discuss this with your agent. Then price the house accordingly, or offer a rebate to the buyer after closing so they have cash to work with to cover the cost of carpet, paint, etc.
That's how I felt when I was buying houses. Now we will soon be downsizing, and as a seller I will probably also take the minimalist approach. I'm sure there are some buyers who also think that way, as well as buyers who want "ready-to move-in." It all comes down to price, I have always felt that anything can be sold if the price is right.

Valuethinker
Posts: 39260
Joined: Fri May 11, 2007 11:07 am

Re: Downsizing - How much to invest in a house before selling?

Post by Valuethinker » Mon Dec 25, 2017 7:04 am

SoDakJeff wrote:
Wed Dec 13, 2017 10:00 am
My wife and I are in the process of getting rid of some of our accumulated junk with the idea of downsizing to a newer, smaller, more "user-friendly" house (ranch vs current split level). Our project has opened our eyes to some of the maintenance that we've deferred over the years. For instance - The place could use new carpet. It definitely needs new kitchen flooring. The interior hasn't had an updated paint job in a long, long time. When we bought this place, the fourth bedroom was unfinished and we've been using it as an office/storage room, and it probably should be upgraded to the bedroom it was supposed to be. The main floor bathtub/shower is looking pretty dingy. There are a number of other, mostly cosmetic updates that could also be made.

I guess our question is this: How much money should a person invest in a house that is going to be turned over to a new owner? Is it better to ask less for the house and let the new owners put in carpet, paint, flooring, etc. to their liking rather than us doing it and finding out that potential buyers don't like what we've done? I know we're going to have to put money into the place to get it show-ready. But I keep reading that even the biggest remodels (kitchens, bathrooms - which I'm not going to do) only have an ROI of about 75%, so is it better to lose money by fixing things up, or by going for a lower asking price?

Thanks for your perspective on this.
Does depend on market.

All that you say in para 1 is yes. Carpet paint bedroom. Bathrooms have to not look grungy.

All cosmetic is yes.

Deep clean and dejunk. Always less over more.

AntsOnTheMarch
Posts: 610
Joined: Mon May 29, 2017 5:47 pm

Re: Downsizing - How much to invest in a house before selling?

Post by AntsOnTheMarch » Mon Dec 25, 2017 7:18 am

Downsized from tired and neglected house 4 years ago. My advice? Find a good real estate agent and utilize their experience.

Our agent advised against doing many things that we thought would be necessary and focused us on one major item and a few small ones (paint/touch up—which I did all myself). Restaged furniture a bit and got rid of things/clutter. Told us or leave some disaster areas alone because those rooms would not be a priority to young family and they’d want to repaint kids’ rooms anyway. Saved time and money there. We gave a small credit for non-working appliances so new owners could apply to their needs and tastes. All this was much cheaper than we expected to spend. House sold in 5 days for asking price in an slow market. Our real estate agent earned every penny of her commission in my book.

hoops777
Posts: 2765
Joined: Sun Apr 10, 2011 12:23 pm

Re: Downsizing - How much to invest in a house before selling?

Post by hoops777 » Tue Dec 26, 2017 6:15 pm

Good realtors make a lot of money,especially in a hcol area.If you are paying someone a lot of money to sell your house,they should have the expertise to advise you correctly on what you need to do to get top dollar or a quick sale.If I spend x amount changing this how much should the house sell for?How much if I leave it as is?A good realtor should be pretty accurate.
K.I.S.S........so easy to say so difficult to do.

Post Reply