I just don’t buy it.
I read an article put out by the National Association of Realtors and the National Association of the Remodeling Industry. It said putting on a new roof is the biggest single item a seller can do to get the highest return. They said it increased the value of a house by 105%. Get this, remodeling or updating your kitchen only brings back about 67% in added value.
I laughed so hard I snorted a little.
About 50% of my work is with buyers. I sell a lot of houses. I have been doing for over 10 years. My experience in and around Lexington Ky is that very few buyers even notice the age or condition of the roof. The HVAC too for that matter. Most buyers care more about the appearance of the house than anything…..assuming they were okay with the location to have even considered viewing the house. Most don’t think about the roof (or windows or HVAC or water heater) until the home inspection. That is why I always try to think about these things for them. I am always telling people the age and condition of the roof and the rest of the house. In fact, I’m working with a buyer right now who fired their old realtor because they kept making offers on houses that were in terrible shape and the deals fell apart after the home inspection. The last thing I want is a client of mine to emotionally move in, tell their friends and family all about the house, and then it fall apart after the home inspection.
Several years ago I listed a house for some clients/friends have used me several times. Their house had new windows and literally a brand new roof. The house was a bit outdated. They found their dream home before doing much inside to this one. The seller knew a lot about houses and wanted to take care of those big items first. LOL, I guess I am the same way because I am sitting in my own home, that has a new water heater, sump pumps and I am about to put in new windows…..yet I have a master bathroom that dates back to when Dallas and Knots Landing were new shows.
I put their house on the market. I showed it several times. It took a while to sell because it was outdated. I would remind buyers that there was $15-20k in windows and the roof that they would not have to spend. I would tell them it is more fun to spend that much on flooring and granite than to buy another house that was updated inside but would need new windows and a roof. It finally sold, but my point is that most buyers make decisions on how updated a house LOOKS. That is just how it works. 99% of the time, I would rather have my sellers drop money on updates that can be seen verses maintenance items than cannot. Unless a roof is just ancient or really ugly, most buyers don’t care as long as it doesn’t leak.
So, I totally disagree with this report. It just isn’t happening in my area.
And ALWAYS consult with a knowledgeable real estate agent in your area before making big decisions. I spend a lot of time advising friends and clients about how to spend money on their houses. You need somebody who knows the market and even your neighborhood to help make decisions.
There are a lot of variables depending on your neighborhood and price range.
We had a hail storm several years ago in South Lexington. Almost everybody got a new roof. The norm in those neighborhoods was to have a new roof. Buyers expected a new roof. It was a negative in that situation to not have a new roof.
There are several neighborhoods that are about 15 years old right now. The norm is to have original HVAC and roof. Since buyers will be viewing houses that all have an older roof or HVAC, a seller would do better to spend money updating the interior if they are considering selling any time soon. If they plan to stay forever, it is okay to spend their money any way they want.
Random Real Estate Thoughts
6 Common Seller Mistakes
Some things Sellers think are okay to do, but are never a good idea:
- Pricing with a lot of wiggle room. Sellers normally end up selling their houses for less than if they would have priced it competitively from day one. Nobody is afraid to make a low offer on a house that has been on the market for a looooooong time.
- Not painting when they know the house needs paint. Sellers say “Since I don’t want to make the wrong decision in picking a color, I just won’t paint. The buyer might end up repainting again anyway?” Truth is very few buyers have any vision. If the paint is ugly and/or in poor shape, it makes the house feel bad. Buyers don’t buy houses they don’t feel good in, unless they can get a bargain. Plus, if your house isn’t selling, you know that your current paint color isn’t working.
- ANY type of allowance. If you write in the marketing remarks that there is a painting/carpeting/decorating allowance, it immediately tells everybody that your house has a problem. People don’t want to buy your problem. You know who is attracted to allowances? Bargain shoppers who want to get your house for below it’s market value. Also, if you build an allowance into the asking price, it means your house is competing with better houses. I was in two houses today. Both were the same size in the same neighborhood. One was move in ready and gorgeous. The other had stained up carpet. The nice one was $204k. The not so nice one was $214k but had a carpet allowance. Which would you pick? Yeah, me too!
- Not moving everything out. I see this one all the time. The seller no longer lives in the house, but some of the closets have stuff in it and the garage is full. You are going to have to finish moving sooner or later. Do it now so the house looks better. People want “Move in Ready”, not “Move OUT ready” condition.
- Checking out. I mean mentally. I see a lot of sellers who have vacated their houses and never look back. After a few weeks, the floors are dirty, there is dust everywhere, there are 3 phone books on the front stoop and mother nature begins to reclaim the once nicely mulched flower bed. Then there are the business cards. Many realtors leave a card on the kitchen counter……which tells the next buyer that many other buyers have looked at the house with their agent and none of them wanted it.
- Reducing the price too late in the game. Many sellers decide to reduce their listing price at exactly the same time all the other sellers do. If everybody drops their list price by $5k all in the same week, then your house is no more competitive among other listings than it was before. The goal of a price reduction is to become more competitive. So, if you’re going to reduce, the sooner the better.
This is just the short list, but enough to keep you from shooting yourself in the foot.
Fall Market Blunder
It’s that time of year again. The time when sellers make their biggest mistake.
Many people think fall and winter are bad times to sell. Truth is there is never a bad time to sell. If you have a good house that is priced right, it is ALWAYS a good market for you. Sell it whenever you want. You might even get more in the fall/winter. There are two sides to the supply and demand equation. Yeah, there are more buyers out in the spring and summer, but there are also fewer good listings in the fall and winter.
Let’s say you have a house that hasn’t sold this past summer. Your instinct is to take it off the market. But guess what? If nobody knows your house is for sale, then there is a 0% chance of selling. Then let’s say you wait until spring to put it back on the market. Well, you are setting yourself up for failure all over again because you will have to compete with better listings.
Without a doubt, fall/winter is the BEST time to sell a house that did not sell earlier in the year. I preach this to sellers all the time……few ever believe me. Whenever I have a listing that is hard to sell for whatever reason (steep driveway, bad lot, poor condition, awkward floor plan, etc) it always sells in the fall/winter. It is because there are so fewer choices for buyers that your listing looks better. It’s like that last piece of pizza. The one that only had one pepperoni on it and didn’t have much cheese. Once all the better pieces have been taken, you eat that one because you don’t have another choice.
I’ve had two listings that were hard to sell this year. One was an amazing house whose only flaw was a sloping lot. The other was a great house too. On a golf course with a view of a pond. The problem there was that the HOA dues were nearly $1500 a year. If you didn’t plan on golfing, there were similar houses for similar prices in similar neighborhoods that didn’t have those HOA dues.
The high HOA seller took their house off the market and wants to try again next spring.
The amazing house with the sloping lot just sold. While it was an amazing house, it was always the bridesmaid and never the bride as long as there were other amazing houses with flat lots. Once the market exhausted it’s supply of amazing houses with flat lots, this one rose to the top.
So, if you are thinking of selling, or you have been trying to sell, now really is a good time!
What The LEXpert has been thinking about
Here are some things that have been on The LEXpert’s mind lately:
- I am seeing more and more interest in the houses around Liberty Road and Henry Clay Blvd. About 25 years ago I saw that once Kenwick got expensive, interest would move to the Courtney/Clayton area. And once those prices shot up, it would keep going further down Henry Clay Blvd. What I didn’t see back then was that Delaware would become a hip spot for businesses and restaurants. Back then, we all thought it would remain the scuzzy industrial area it had always been. You watch, once the National Avenue area gets filled and rents go up, you’ll see more businesses you want to frequent along Delaware and Winchester Road. The great thing about the Henry Clay/Liberty Road area is that you are minutes to downtown, minutes to NoLi, and minutes to Hamburg. It really is an ideal location.
- Greenbrier is seeing a lot of sales. I have seen several that sold by word of mouth lately. A couple others sold extremely fast. I think it mostly has to do with the new school districts. It is no longer a nice neighborhood on the wrong part of town thanks to Hamburg. It is also no longer a nice neighborhood with a poor performing school district. It will attract people who want to have their kids in public school now. That makes for a broader market. That means more buyers for fewer houses. That means prices go up.
- The $350-500k market is strong in Lexington still, even as we get late in the year. Sales seem to come in waves. There might be a few slow weeks for certain parts of town and then, all the sudden, that area will have lots of sales in one week.
- Century Hills is blowing my mind. I have seen several 3 bedroom/1 bath houses without a garage sell for over $100k, some close to $110k. It wasn’t too long ago that the nicest ones out there were $95k! Percentage wise, that is a huge increase. Looks like we are back to the days where under $100k doesn’t get much.
- I think that the new Citation Blvd is going to be a big gain for the west side of town. That road really ties together all the neighborhoods between Georgetown and Leestown Road so well. It is easier to get in and out of that area too. It nolonger feels like a bunch of random neighborhoods scattered across the west side of town. Businesses are what the area needs. I think values will really go up if the residents of those neighborhoods do not have to go to Hamburg or south Lexington for shopping/dinning/entertainment. A nice big road like this might attract them.
This is an exciting time to be in real estate. Things are changing so fast. Prices are increasing in some areas, stable in others. Tastes are shifting too. It is a lot to keep up with…….every new business, every new road that opens changes how people feel about a location.
Kitchens/baths and how NOT to over-improve
Kitchens and master baths. There is a lot of confusion about them. Watch HGTV and you’d think that is all home buyers care about. Since I don’t want you taking your advice from people who don’t sell houses, here are some things I tell people:
- While kitchens and master baths ARE very important, the whole house must be attractive. All too often I see sellers who blew the budget on a kitchen renovation and left the hall baths and other rooms the same. That is polarizing. Plus, the new stuff just makes the old stuff look worse. If you have $50k to drop on your house, spread the love all over the house.
- Watch out for over-improving. It is soooo easy to get carried away. You’re like “Everybody has granite. I want marble. Well the Carrera Marble is just a little more and I love the veining.” You only have to be a little better than all the other houses in your price range. If you’ve got a $150k house, no $150k buyer is expecting higher end updates.
- Some things just don’t give you a good return on your investment. A massive deck that cost $10k to build might only get you an extra $3k compared to other houses with normal sized decks. A $7k roof really isn’t worth any more than a roof that is less than 10 years old and doesn’t leak. A new water heater has no value over an existing one unless the existing one is just super old. Buyers don’t like to reimburse sellers for maintenance. If it isn’t exciting, then it has no value. It is easier to sell a house with bad windows and granite counter tops than it is to sell a house with argon filled, Low-E triple pane windows and a green laminate counter top.
- THE cheapest thing you can do to help your house sell is fresh paint and carpet/flooring. Think about it, flooring and paint is all you see in most rooms. Even an ugly kitchen or master bath can get a nice facelift with just new flooring and paint.
All this reminds me of several houses I have been in over the years. The best (or worst) one was a house behind where I use to live. A realtor was flipping it. This is in a 1970s neighborhood where most houses still had everything original. He came in and did an amazing kitchen and master bath. He also left the paneling in the downstairs family room. It was a polarizing house. You loved some of it and hated some of it. It didn’t sell.
My wife and I looked at a house in our current neighborhood. It had an amazing deck and high end kitchen cabinets….the kind you see in a magazine. We tried to like it, but the 99 cent laminate floors in the kitchen and the paneling downstairs turned us away. Those sellers must have run out of money when renovating the kitchen. I’ve never seen such cheap. rental grade laminate floors with such nice cabinets.
So when you are thinking about resale, look around and see what is the norm in your neighborhood and price range. Definitely don’t cheap out, but also don’t go overboard.
Your Lexington Kentucky Neighborhood Expert 