Too small? Too old? Too beat-up? Too noisy? If your home no longer meets your needs, should you move to one that does, or should you renovate? Most homes have lots of unrealized potential. You know - the things you planned to do right away when you first bought the place, before your busy life took over.
There’s nothing more rewarding than seeing your home transformed from ordinary to spectacular. Perhaps you have gotten used to the comfortable shabbiness of your home and don’t really see it anymore. If you have lived in your place for years, you might be used to seeing the worn carpeting, damaged linoleum, and ancient plumbing and electrical fixtures. It’s hard to find time to remodel. You have to choose the details and schedule the work – not to mention the costs involved.
The Tragedy of Procrastination
It’s an enduring tragedy I witness over and over: sellers who have finally decided to freshen up their homes just before selling. They never get to enjoy the results of their labor. Their excitement about their beautiful new improvements is marred by regrets and “if onlys”:
“If I only had done this sooner, so that I could enjoy the -------------- (fill in the blank with new appliances, carpets, paint, landscaping, bathroom, kitchen cabinets etc.)!!!!!”
“I had no idea that just ------------ (fill in from above list) would make such a difference. I wish I had done it years ago!”
“Auwe, the place looks so great, I hate to sell except I took that job in Las Vegas!”
“Maybe I should raise the price - can you believe how different the place looks?!”
My unspoken response: “Yes, I can because when you first bought the place 5 years ago we agreed that the fix-up was necessary!”
What Buyers Want
Unless you plan to stay in your home forever, it helps to know what home features are most valued by buyers. For what it's worth, here are the top ten, according to the National Association of REALTORS 2007 survey of buyer preferences. Some of these are obviously more attainable than others:
- Central air conditioning
- 2 car garage or larger
- Walk-in closet in master bedroom
- Back yard/play area
- Cable/sattelite TV-ready
- High speeed internet access
- Separate shower enclosure in master bath
- Patio
- Fencing
- Home less than 10 years old
Don't Look Back
In my 20-plus years real estate experience, I have never heard a property owner regret doing simple and tasteful renovations. It might be just a fresh coat of paint and carpeting, or it could be major projects such as enlarging a kitchen and redoing the master. The results can change your whole outlook on your home life. If you choose wisely and watch your dollars, the expense is likely to bring you a solid return on your investment if and when you sell. So let's look at how to decide whether you should renovate or sell to find your best home.
1. Define your main objective. If you want to be on a flat lot near the beach and your current dwelling sits on top of a mountain and up a couple dozen steps, your choice is simple. Find a home on flat land. Want four seasons? No renovation will provide a White Christmas. You’ll need to move to the mainland.
2. Consider your capacity for chaos: Can you bear living in a construction zone and cooking your meals on the bathroom counter? If not, you should probably look for a home with a great kitchen already in place. Major renovations are likely to take in excess of 6 months and could take far longer. Other types of renovations are less disruptive of daily life - such as constructing an extension to your home that will not create havoc in the existing kitchen and master bedroom.
3. Take into account how long you will be living in the renovated home. If you plan to sell in just a few years, be sure that whatever you do to renovate will hold value and appeal to most people. In that case, it’s safest to go for more neutral styles. Look at design magazines to get an idea of what appeals to current tastes. If you plan on being in your home until you get carried out horizontally, you can go for your own unique personal style and create a dungeon in the bedroom and a bowling alley in the basement just for you.
4. Figure out what you can afford. Loan guidelines have changed greatly. See a reputable local lender who has an office you can actually walk into, and who has been in business for a while. Good credit and a lot of equity in your home are more important now than ever. Stretching yourself too thin was never wise, now it’s more difficult. Ask for recommendations if you are not sure. Homeowners over 62 with equity in their homes may be able to use a very flexible and inexpensive type of financing known as a "reverse mortgage" to finance their renovations.
5. Work on a detailed plan. If your home can be changed to fit your needs, sharpen your pencil. You will need several lists, so designate a notebook to help you organize your projects.
Start by listing repairs such as faulty tile, damaged doors, leaking pipes or fixtures. Is your plumbing and electrical up to date? If you had a professional home inspection when you purchased you have a head start, because this will give you a “punch list” of items that may need attention. If your home is a single family dwelling, you will want to be sure the foundation and roof are functional since they support and protect the interior. Consult with at least one licensed contractor for anything structural. It’s important to utilize licensed plumbers and electricians for legal as well as safety reasons. Keep the repairs list in a designated place as you will be adding to it from time to time.
Next, think about what your space requirements are, and other home enhancements you want. Do you want a larger kitchen, additional bedroom or bath, or outdoor living area? Perhaps a pool or spa?
6. Be realistic, and examine where you actually spend your time. Will you use that home gym? Is a waterfall really important? Do you need top-of-the-line appliances if you hardly cook? Divide your list into “must haves” and “nice but not necessary” features. Put both lists in order of priority, with your absolutely essential features on top.
If your lists are growing long, consider whether you want to manage and organize the work yourself. A general contractor can coordinate all of the stages of the project, and insure that the work is proceeding in the most efficient order. If you want to handle the coordination of the work yourself, you should be careful to think through the entire project before starting on any one phase. For example, you don’t want to replace the flooring or carpets until after you have finished the messy work of painting or carpentry.
7. Consider the Market Factors: Your Realtor can help you decide whether adding improvements to your existing home is wise, given the prevailing values in your area. It’s also smart to discuss where to spend money to add the most value to your property. This varies from neighborhood to neighborhood so local knowledge is crucial.
Cost vs. Value Study: A detailed report is published annually by Hanley Wood for each region of the country, for the construction and real estate industries. This compiles some 30 projects and gives you the predicted return on selling for that item. The 2007 report shows that in the Pacific region, the best return on your investment is likely to be the following items:
100% or More Returned:
Deck addition
Minor kitchen remodel
Window replacement
Siding replacement
Bathroom remodel
Basement remodel
Major kitchen remodel
95% of Cost Returned:
Attic bedroom remodel
Bathroom remodel
Basement remodel
Major kitchen remodel
Planning Minimizes Stress
Whether you plan to sell after renovating, or years later, you will never regret wisely-planned improvements. later, if you are getting ready to sell, you will be very busy anyway. It will be so much easier to accomplish without the added pressure of a tight schedule. The immediate impression a buyer gets when walking into a home for sale is crucial to creating interest in the property. That’s why big home developers hire pricey interior designers and spend hundreds of thousands of dollars creating “model homes”. The basic four walls of each room are just a blank canvas to display the lifestyle that will be yours if you buy today!
Most home seekers do not have the ability to see beyond this first impact on the 5 senses. If this impact is positive, they will develop an emotional response to the property that will have them taking out their checkbooks in the blink of an eye. Even after they find out later that the beautiful interior finishings are expensive upgrades, they will still want to be part of that picture. Never mind that their own Salvation Army furniture will not complete the picture in their mind’s eye.
"AS-IS" Is Costly
A negative first impression will not overcome a low price. Unpleasant sights, smells, and visual pollution- such as that pile of junk on the curb- will kill the deal before they set foot inside. Even if the property survives the first viewing, the buyer will see dollar signs well in excess of the actual cost. It is almost always more economical for a home seller to do some basic work to spiff up a tired-looking property.
Realtors are in uniform agreement about the effect of well-chosen work done by home sellers. Fresh paint and carpet set the stage, and generally return twice the amount spent if good choices are made. Save the dramatic colors and exotic finishes for another time, or accept that you may be actually lowering the value. Repair any obviously broken fixtures. New lighting is a cheap thrill. The price range of the improvements should be in line with the value of the property – if it’s a luxury home, don’t cheap out!
Cheap Thrills
Once you research your choices, it’s OK to think outside the box. Get a little creative. Visit Open Houses and view model homes to get ideas and define your tastes and preferences. Pick a theme and use it throughout the home, to make a harmonious statement. Try using a touch of color when you paint – it’s cheap thrills. Consult with a professional interior designer if you need help or want a truly remarkable results – many of us don’t have the time or experience to create the desired effect. Some Realtors offer staging service as part of their listing. And don't underestimate the power of llandscaping and curb appeal. Try to have fun and look forward to celebrating the results!
If you would like a copy of the detailed report on Remodeling Cost vs. Value 2007, please call Stephanie at 951-3215 or email me.
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