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NAR: Renovations not paying off in sale of homes?

By
Home Stager with Round Rock Home Stager Austin Home Staging

One of the REALTORs that I keep up with on Facebook posted a link to a Yahoo Real Estate News Article this morning that caught my eye.  It was called: "Renovating Doesn't Pay Off Like It Used To" by Les Christie.  If you're interested in reading the original article, it's available at REALTOR.org: "2009 Cost vs. Value Report" by By G.M. Filisko.

A rush of thoughts has come to mind reading both of these articles.  First and foremost, Isn't "All Real Estate LOCAL?" It's kind of cliche, but what's working here in Austin is not necessarily going to apply in San Francisco or Las Vegas. That makes my recommendation to only take this article at its face value because it is based on National Averages. 

The Yahoo Real Estate article mentions that High-end Kitchen remodels are not paying off... well, it shouldn't take a genius to figure out that spending apx $112,000 (Yahoo's Avg for 2009) was not a good selling strategy.  You'd have to be in a very specific market for a long period of time for a six figure renovation to pay for itself.  There are some areas of Austin where people have owned homes for a while that this could apply to... if you were the original owner who purchased the home in the 1970's...

Instead of picking apart both of these articles on the minutia, let me just make one recommendation:  Discuss the need for renovations with your REALTOR.  When they are working up the comps for the pricing of your home, they should also be making notes of features of the homes that are selling.  And they should be informing you what the builders in the neighborhood are doing.

My favorite example:  granite counter tops.
Granite counter topsIt's not uncommon to hear an agent recommend granite counter tops as an upgrade in preparation for selling your home. After all, they always add granite on HGTV. [Wretch!] Granite is NOT Always the answer!  But if your REALTOR is able to show you that 3 out of 4 of the homes in your area that sold in the last 60-90 days had granite counter tops, it's time to consider it.  Then, if they show you that granite is a upgrade featured in new home construction in your immediate area and is already installed in their available spec homes, then you are going to have to seriously consider doing the work.  But if neither of these hold true, do not put the money into your counter tops if it could be used more appropriately elsewhere!

As your Home Stager, I can help you complete the renovations and repairs, but I lack the access REALTORs have to the local market sales and statistics. That's why I like to consider each home a partnership opportunity.  The REALTOR can do what they do best: Price, Market and Sell the home.  While The Stage Coach will stick to what we do best: getting your home in Sell-Ready condition.

 

Comments (9)

Donna Harris
Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com - Austin, TX
Realtor,Mediator,Ombudsman,Property Tax Arbitrator

For the most part, I would think renovations don't necessarily pay for themselves because many people are just getting their house up to market condition.  If they want to sell at the market price, they home has to compare and if the home is stuck in the 70s or 80s, they won't get back the $10-20k they spend on a new kitchen, but they won't have to price their homes really low in order for the buyer to recognize it's priced for a redo.

Dec 28, 2009 05:20 AM
Michael Fontana
Round Rock Home Stager Austin Home Staging - Round Rock, TX
@ The Stage Coach

hi, Donna:
If it were my home, I'd want to know several things. But first I would look at the home's Equity vs. Debt vs. Market Price. A home stuck in the 70's or 80's would have had potential for good market appreciation over the years in Austin, depending on the neighborhood, when they bought, and upkeep.  So they might be able to get a good return on a $10k-$20k preparation. If they're Mortgaged up to their neck, bought the old home in a peak year (2007?), then no,  they probably wouldn't see any decent return.

My current home is vintage 2000 in a non-appreciating area of Round Rock [primarily due to foreclosures]. While I would love to update the baths, hardware, cabinets, appliances and counter tops in order to sell the place, I'd never see the return due to the relatively small amount of equity we have built up since the purchase, and the home's failure to appreciate since our purchase in 2002.

Makes me wonder if there's a mathematical formula for this...

thanks for stopping by.

The Stage Coach - Austin's Home Staging HandyMan!

Dec 28, 2009 05:56 AM
Lori Kim Polk
Premiere Home Staging : Home Staging Services - Roseville, CA
Home Stager - Roseville, Sacramento

I am going to stick with my local views and say that in selling a house, if it doesn't at least have granite... it could be overlooked. True... concrete, crushed glass, and even paper have taken the "counter" rage. The average buyer nowdays wants better than they have. Go figure. If you can upgrade from that dirty tile and grout... then do it, if not... your neighbors just did ;) We are just as busy with our ID jobs as we are with staging and upgrades are the main focus right now.

Dec 28, 2009 02:24 PM
Ricki Eichler McCallum
CastNet Realty - Corpus Christi, TX
Broker,GRI,ABR, e-Pro, TAHS

Good post, Michael.  Checking local market conditions is the first thing to look at when considering upgrading your home.  Otherwise, you could put lots of money into it and not get it back.

Dec 29, 2009 02:31 AM
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
Retired New Hampshire Home Stager

I agree that not every upgrade is essential for every house.  People have to do their homework and they have to have the right people, professionals, on their team helping them to determine what will work for them.

Dec 29, 2009 04:00 AM
Ginger Foust
Certified Staging Professional - Oakhurst, CA
Home Stager Oakhurst CA, Dream Interior Redesign & Staging

I HOPE that when logical people look at broad nationwide statements they consider their local situations before making very expensive decisions.  Competent REAs certainly are a valuable tool in helping with those decisions.  Good information Michael, thanks for sharing. 

Dec 29, 2009 04:44 AM
Cathy Lee
CL Design Services Home Staging - Danville, CA
ASP, IAHSP, RESA Danville, CA

Good post. Knowing the market-working with experts is essential.

Dec 30, 2009 04:25 AM
Tom Thornton
Realty Austin - Austin, TX
Broker Associate, MBA, ABR, CRS, GREEN, GRI, SRES

Another recent article mentioned that new front doors, a mid-range bathroom update (esp. in the 1/2 bath), and a redo of kitchen cabinets or backsplash tile were some improvements that were low cost, high return.

Jan 02, 2010 01:55 AM
Michael Fontana
Round Rock Home Stager Austin Home Staging - Round Rock, TX
@ The Stage Coach

Thanks for the comments everyone!

The Stage Coach - Austin's Home Staging HandyMan!

Jan 06, 2010 12:28 AM