Updating Advice

Kitchens/baths and how NOT to over-improve

by John Rice

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.

How adding a 2nd bath ruined a house

by John Rice

I went out with a client to look at houses yesterday. This will be the 3rd time this lady has used me. She is super cool and always likes interesting houses. After totally renovating an old house on top of a hill deep in Jessamine County, this time she wants to be in town. So we are looking at older houses around the University of Kentucky.

We saw several houses yesterday, but today’s blog post is about one in particular. This house was “Renovated” after being bought for just over half of today’s list price. The materials used were fantastic. The house was in in good shape. It was all going swell until we got to the 2nd bathroom. You walked out of the dining room into this space that had a bathroom sink. Beyond the sink room was a pantry and another room that housed the rest of the bathroom. Not the end of the world if that was all….but also off the sink room was the kitchen. So, to get to the dining room you had to walk through the sink room, which felt like that awkward area of some hotel rooms that have the sink outside of the bathroom. It pretty much killed any hope of this being “THE” house for my client.

When I go into an old house that has been remodeled, I like to try to deduce what the original floor plan was like. I usually look at door trim and baseboards. If something doesn’t match, odds are that indicates a change.

Knowing a house from the 1920’s would have had a dining room, one bathroom and probably a small kitchen, I deduced that the room that was NOW the kitchen was the original 3rd bedroom. The space that was the sink room/toilet and tub room/pantry was probably the original kitchen. It was off the dining room and had one tall window in the pantry which made me think it was tall because there was originally a kitchen counter under it.

So, I go home and look up the previous listing from the last time it sold. Sure enough, it was a one bathroom house and I can see the window in tub/toilet room and the tall window with the counter top under it. I LOVE it when I am right 😉

The seller really ruined this house in my opinion. They probably did it because they heard it is easier to sell a 2 bathroom house than a 1 bathroom house. True in general, but…..If this house was a newer house, it would be harder to sell. If this house was a larger house, it would have been harder to sell. If this house was not in a cool older area with an awesome location, it would have been harder to sell. But it was none of those. It was a modest sized, older house in an area where a lot of houses still have one bathroom. You’ve really got to know your market when making these decisions. So, they would have been better to have kept it as a 3 bedroom/1 bathroom house than screw up a perfectly good floor plan by adding a 2nd bathroom. They probably would have sold their house yesterday if they had left it alone.

That is just my 2 cents, but if you want 2 more, here you go: After looking at the floor plan, I think I personally would have kept the kitchen where it is. The wall between it and the dining room could have been removed allowing a more open feel as well as a place for bar stools. It would have been cheaper too since all the plumbing was already there. I would have left the 3rd bedroom (where the new kitchen is now) alone. If you absolutely needed a 2nd bathroom, it would have made more sense to have converted one of the bedrooms into a private master bath and walk-in closet. You would have had a private master bathroom that way rather than having the new bathroom on the other side of the house between the kitchen and dining room.

What “Love it or List it” DOESN’T want to tell you

by John Rice

Love it or List it is one of my favorite shows…..but they are aren’t giving you a good picture of reality.

On Love it or List it only part of the house gets an amazing makeover.

Here is my beef. Value. At the end of both shows, they tell the owners that the money they spent to improve their property paid back more than 100% of the investment. What they don’t tell you is that appraised value really has nothing to do with market value. Appraised value is what it should be worth. Market value is what it IS worth.

From working with a ton of buyers for over 8 years now, I can tell you with absolute certainty that going overboard renovating a few rooms of your house and neglecting the rest does not add much value at all….at least not in Lexington Ky! The buyers who will be attracted to the fancy new work will be turned off by the untouched rooms. Buyers who don’t mind the untouched rooms will not want to pay for the fancy new stuff. The new work just makes it more obvious that the rest of the house got passed over. The house is too polarizing. If the homeowners on this show really wanted to sell, they would have done better to spread the same amount of their cash over the entire house rather than go over the top with a few select rooms.

I sold a house earlier this year that could have been a Love it or List it house. It had an $80k kitchen remodel. High end everything. 3 ovens. One of the most amazing slabs of granite I have ever seen. It also had bathrooms from the early 90’s. The rest of the house just couldn’t deliver what that kitchen did. It was a nice house, but that kitchen didn’t add $80k in value. My buyer got a good deal though. Funny thing is he doesn’t really care about the kitchen at all.

How to turn $1000 into $5000

by John Rice

 

This bath looks pretty nice, huh?  Would you believe that just a week before this picture was taken it was probably the WORST feature of this house?  It looked like a worn out 1997 Parade of New Homes bathroom.  I can talk about this bathroom like this because this is my old house.  Thought it might be a good example of how you can often spend a little money addressing the worst features and turn it around.

So, here is where my $1000 went:

1.  The ugly and rusty builder grade light was replaced with this oil rubbed bronze one from Lowe’s for $110 and 15 minutes of my time.

2.  The very worn out white and green vinyl floor was ripped up and replaced with ceramic tile for $600.  These tiles were only 57 cents each, but laying them diagonally gave it some pizzazz.

3.  The whole room and pickled vanity were painted for about $200.

4.  The cheap gold hardware on the cabinets were replaced with oil rubbed bronze ones for about $25.

The tub, shower door, faucets, big ol’ plate glass mirrors and the rest are all original stuff.  I wanted to replace the plate glass mirrors with two individual framed mirrors, but I didn’t want to risk slicing an artery since I was doing all the work alone.

As you can see, I don’t even think I spent $1000 to turn this bathroom into one that is nicer than most in my old neighborhood.  Did you catch that?  “Nicer than most.”  That is all you need to do.  Sure, I could have dropped $15k in this bathroom and made it over the top and EVERYBODY would have loved it.  I could have, but didn’t because I wouldn’t have gotten a return on it in a neighborhood where few houses have been updated at all.  See, when a buyer or tenant is shopping, they will always pick the best one they can.  All you have to do to get them to pick your place is to study their choices and make it just a little better……one up the competition.

When you do something like this, you not only make it easier for a buyer or tenant to say yes to your place, you also increase the odds of MORE people saying yes to it.  More people saying yes is called Demand, and economics tells us that more demand means getting a better price.

Have a house that isn’t selling?  Create more demand by doing a few minor things like this.  You’ll be amazed at how the public responds.  I am renting this house out, and 3 of the 5 people who looked at it wanted it before I signed a lease.

Before & After Shots of my house…..See what paint & carpet can do?

by John Rice

I’ve been pretty darn pumped up to do this post for quite some time now.  It gives me a chance to show off the work I did on this house and gives me a great platform to yell some more about what a difference carpet, paint and presentation can make.  Plus talk about investment property.

See, this is my house.  I bought it to rent it out…..gotta pay for college for my boys and keep my supply of cool cars fresh you know.  I paid $78k for it.  The foreclosures in this area go for in the mid $60’s.  In fact, an identical house to mine on the same street sold for $65k this summer…..So why am I bragging about paying $78k?  Well, I have been in the other one before and after its renovation.  That one needed a new kitchen and bath.  Mine didn’t.  That one didn’t have the wood trim wrapped in vinyl.  Mine did.  That one had a 27 year heat pump.  Mine has a 4 year old heat pump.  Once you get down to the nitty-gritty and compare apples to apples, I paid about $4k more for mine, but didn’t have to spend as much time to get mine ready nor did I have the risk of unearthing expensive issues during a major reno.   In the end, about the only visible difference between the two houses are color choices and I didn’t put in a dishwasher.  That house was flipped and just sold for $95k.  I think I did pretty good since that house was the same floor plan just about 5 houses down the same road….doesn’t get better than that for comparison sake!

These two pictures are of the same master bedroom.  Can you tell which one is the after?  All I did here was paint, carpet, an $80 ceiling fan, and new outlet covers…..and had a professional photographer snap the picture.

These next two are of the kitchen.  The cabinets and counter top were new just a few years ago.  Literally all I did was paint, a new range and a new ceiling fan….well, I did have an electrician add GFCI outlets just to make sure everything would be safe for my tenants.

These last two are of the bathroom.  All it got was a new toilet to conserve water and fresh paint.  The previous owner had recently redone the bathroom and made great selections!

So, there you have it……if this isn’t a testament to what paint, carpet and presentation can do, I don’t know what is.  I dropped about $3500 in paint, carpet, 5 light fixtures, 2 ceiling fans, a range and a toilet, but added at least $15,000 in value.  This is why I always tell sellers to do these little things because they can get such a big return not only in the sale price but also shorten their days on market.  (The other one just like mine was only on the market for a short time while being surrounded by others that have been on the market forever!)