home improvement

Neutral or Character for Resale?

by John Rice

I had a chance to catch up with an old friend recently. This guy makes fine furniture and cabinets for a living. He was showing me all the things he has done to his house. It was pretty sweet. Not something you see everyday. Loads of character. Then he says to me that he doesn’t get this going neutral for resale thing. He just does what he likes. He then went on to say that the last house he had, he sold to the first person that saw it for top dollar. I’m usually the one saying go neutral and play it safe, but like so much in life, there are exceptions.

I think what my friend didn’t realize is that not everybody has such great taste. His house really rocked because all the work he did was so excellent and the house was full of hand-made furniture. Not everybody can pull that off……I know I couldn’t!

Most buyers are happy to have some common updates when they go looking for a house. It is safe to go neutral because that has the broadest appeal. But, I will say from experience that when a buyer walks into a house that has enough character to be remembered after they leave, they really like it or they really don’t. 

I sold a place recently that had a lot of character. Hardwood floors, unique lighting, a sunroom, a koi pond, a heavily landscaped backyard. Those sellers had great taste too. Their house really stood out as a winner. I’ve also seen several houses that the seller went with their own sense of style, and that is what made their house difficult to sell. 

So, if you are going to throw caution to the wind and go with something out of the ordinary, here is my advice: Make the whole house work together. Don’t do one room at a time without regard to how it relates to the rest of the house. No 4 different types of flooring or anything way random like that. The house will come across like you just went to Lowe’s and bought what was on clearance. Remember that a buyer is walking through your whole house and in their mind, they don’t separate the rooms mentally like we all do once we actually live in a house. 

Well, I hope I’m not contradicting myself too much here. I guess the bottom line is that playing it safe is fine….maybe a little boring, but fine. Character is a gamble. If you are planning on being in your current place for only a few years, go safe. If you want a house with character & will be there for a longer time, go for it. Chances are what you pick will be outdated/worn out by the time you sell, and you’ll get to enjoy it while you live there.

Who is the most important person in your renovation?

by John Rice

It’s not your contractor. It’s not your designer.

It’s your realtor.

Why?

Because one day you’re gonna want to sell your home. You will want all that time and money you spent on the renovation to have added value. Having a great designer and using the best contractors are wonderful things to do, but only your realtor will know if the work you’ve done added value. And let me tell you, NOTHING you do to your house will get a 100% return on your investment.

Here are some things to think about as you plan a renovation:

  1. Don’t over improve. If you live in a half million dollar neighborhood, don’t pick million dollar neighborhood materials. Yes, buyers will love the unexpected upgrade but you will be effectively giving it to them for free. Always keep the level of materials suitable to what people expect for the price range of the neighborhood.
  2. Don’t add too much square footage. I have seen some crazy additions where people end up with the biggest home in the neighborhood. That’s never a good idea. The buyers that want such a big house will probably want to be in a house surrounded by similar sized homes. The people wanting to be in your neighborhood probably aren’t going to want to pay you top dollar for the extra square footage. Also, appraisers usually give credit for square footage tiered to the price range. That means the more affordable your neighborhood is, the less an appraiser is going to value your excess square footage because they will be using recent sales from the neighborhood for comparisons.
  3. Don’t make crazy compromises. I have seen some wonderful additions but due to the existing floor plan of the house, you have to do something crazy like walk through a laundry room to get to the amazing new space. Buyers don’t like that. Yes, you’ve gotten used to it and it works for you but it will be a deal breaker to a buyer. The flow of the addition is very important.

The bottom line is that you want your house to still fit the character, size and price range of your neighborhood. Be sure to go over your plans with your realtor before committing to the job.

Which seller did better?

by John Rice

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.

Don’t do this to your house

by John Rice

I showed a house yesterday.  Nice place.  It was all original except the kitchen.

It wasn’t that old of a house, so it wasn’t what I would call outdated.  Since it wasn’t that old, nothing was worn out either.  I would call it neutrally nice-not bad and not great at the same time.

But that kitchen was super nice, and that was the problem with this house.

Yeah, you read that right.  The remodeled kitchen was a negative.

Why?

Because the people who are attracted to the house due to that super nice kitchen will be disappointed that the rest of the house isn’t as nice.  They leave thinking they would have to “Finish” the rest of the remodeling.

The people who won’t mind the rest of the house don’t care about that super nice kitchen and won’t want to pay for it through the higher list price.  They leave thinking the house is overpriced.

It would have been better for this seller to have spent less on the kitchen and updated all of the house evenly.

That has always been my advice after observing how buyers react to houses.  All of your house should be consistently nice if you want your updates to add value.  If they aren’t, then you are usually giving away that one space where you spent the most money.

The hardest houses to sell

by John Rice

I’ve been at this for a long time.  I’ve sold a lot of houses.  In a good market.  In a bad market.  In Lexington.  Outside of Lexington.  In neighborhoods.  In the country.

Want to know the houses that are the absolute hardest to sell?

The ones that are partially updated.

Why?

You would think that a buyer would view a house that has some parts really nice to be a big bonus.  They don’t.  The nice part of the house just makes the rest of the house look worse to a buyer.  Too much contrast between the nice and the average bits of the house.

Who comes to see these houses?

  1.  The buyer who sees the nice new stuff in the pictures.  They get excited but almost always say that the rest of the house needs too much work.
  2. The buyer who see the part of the house that needs updated.  They get excited because they want to renovate the rest of the house, but not give any credit for the work that has been done……meaning they want it for free.
  3.  All the other buyers who come mainly because it meets some or all of their search criteria.  They don’t buy it because they say it needs too much work.

What you have to do with a house like this is try to make the non-updated bits look as good as possible.  You want to minimize that contrast.  You don’t want the buyer to walk in one room and be unhappy, then walk in the next and fall in love, then walk in the next and be unhappy.  The goal is to make them at least feel neutral, then love, then neutral as they walk through the house.  Less contrast is good.

You also have to really emphasis the other features of the house, hoping that the right buyer will see all the other pluses and feel like they can live with the house like it is or take on the updating.  If the house is the best bargain in the neighborhood, walking distance to trendy places, has a park nearby, a desirable school district, is the most square footage for the money…..whatever the house excels at, and all houses have something unique, that is what you want to emphasize.  Anybody looking for one or more of those unique features is usually the one who buys the house.  Why?  Because they don’t have as many choices