Two houses on the same street. One is smaller and has been renovated. The other is bigger and has had a few minor updates.
The smaller renovated one sells for more money that the larger one with mild updates is worth.
Which owner would you want to be?
You are probably thinking that the renovated house that sold for more would be the owner who comes out better than the other, but you’d be wrong.
That’s because the cost of a remodeled kitchen with a tiled backsplash and stainless appliances, remodeled bathrooms and new flooring greatly exceed the difference in values.
Back when the market was slow, it could have been harder to sell a house that hadn’t seen any big ticket updates like a new kitchen and/or baths. That’s cause there were more houses for sale than there were buyers. The problem is the opposite today. There are more buyers than houses for sale, especially in the sub $200k range.
Sure, everybody loves a renovated house with all the trendy finishes. Buyers will pay top dollar for that look, but for the person who wrote the check for the work, it is a little bit of a bummer because most of the time a seller is lucky to get half back in the increased value. Great for the buyer. Bad for the seller.
I had to tell a seller not too long ago that her house was worth about the same as she paid for it nearly 10 years ago. On paper, you’d think that wasn’t possible. She hasn’t done anything to the house other than enjoy living there. Everything is nearly 10 years older now. Sure, her house could potentially be worth another $15k, but she would have to spend over $20k to add that value. She is actually coming out ahead by selling for about the same as she paid for verses getting a high sale price that lost money to achieve.
They don’t tell you all this stuff on HGTV.
The best bang for your buck on updates are paint, flooring and lighting.