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Update, upgrade or merely maintenance? And what is the difference?

By
Real Estate Agent with Berkshire Hathaway HomeServices New England Properties Licensed in Connecticut

Litchfield County Real Estate Talk, is that an update, an upgrade, or was that merely maintenance?

Litchfield County CT real estateI hear it all the time, I put a new roof on, new siding, new furnace, the dreaded new septic, so THAT will certainly add value to my property, right? I mean, after all, I upgraded.... right?

Are these updates or maintenance?

You won't get your money back for putting on a new roof, or replacing a failing septic or a furnace that blew... nope, sad to say but you won't. Not in the way that you think.

You and your neighbors home started life as identical dwellings. Over the years your neighbor has done nothing, the house has the original roof, original septic, original heating system, on and on. The house shows wear and tear. But you put a new roof on, you replaced the failing septic and heating system. (But otherwise the homes are still the same) I will give it a bit more value for condition, you will be more marketable, more sale-able. But dollar for dollar, you won't get it back. That is routine maintenance that should have been done. The good news? Your neighbors house, with all the deferred maintenance, is worth less than yours!

When an agent tries to sell me on the fact that the house had upgrades, a new roof, a new furnace, a new septic, I tell them that is maintenance, routine maintenance. It may make the sale easier, but a new septic doesn't warrant a $25,000 price increase over an identical home with the original septic!

It does work in reverse however. I will say, if the septic is shot and the price to replace it is $25,000, I can pretty much guarantee that the sales price will reflect that $25,000, even if the asking price or the offered price didn't reflect it in the first place.

Upgrading, updating, that would be a bit of a different story. A home that has a new kitchen, complete with granite counter tops and stainless steel appliances is certainly more valuable than the house next door with the original kitchen from the 70's. Bingo, you are at the head of the class! Now you are worth more!

That was my long answer, now here is my short answer. There is only so much value we can give your house, no matter what you did to it. Style, size, location, market conditions, these all come into play. I cannot use a 4 bedroom, 2.5 bath colonial built in 2005 as a comp against a ranch built in 1970, no matter how many updates and upgrades were done. After all, a t-bone steak is worth more than a rib eye steak! But the good news is, there are many people that will be happy with rib eye at the end of the day!

Yes, make sure you maintain your house, that deferred maintenance may cost you a bundle when you go to sell. And when you have upgraded, you will see an increase in price, but not dollar for dollar!


Posted by

Andrea Swiedler, Realtor, Southern Litchfield County Real Estate

2017 President, Greater New Milford Board of Realtors

2017 Connecticut Magazine 5 Star Realtor

 

 Search homes for sale in Litchfield County, CT.

 

Coldwell Banker Residential Brokerage

Litchfield County Regional Office,375 Danbury Rd, New Milford, CT 06776

 

© Andrea Swiedler 2009 - 2017

 Always do right. This will gratify some people and astonish the rest. - Mark Twain

Comments (29)

Kathy Streib
Cypress, TX
Home Stager/Redesign

Andrea- very feature worthy! I see this when I'm giving a staging consultation.  All of the items will help to get your house sold but you can't view it as a dollar for dollar increase in your asking price!  If you upgrade your kitchen...granite, new appliances, etc.... your home could shoot to the top of the list but if homes in the area are listing for a certain price then that's what the market is going to look at. 

May 01, 2012 09:02 PM
Mike Cooper, Broker VA,WV
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

Andrea, good points.  I don't think a lot of folks would even think that a new roof or HVAC system isn't an upgrade, but you've got a good point.  Congrats on the feature too.

May 01, 2012 09:17 PM
Andrea Swiedler
Berkshire Hathaway HomeServices New England Properties - New Milford, CT
Realtor, Southern Litchfield County CT

Pat, when buyers can see deferred maintenance, they always wonder what they can't see. And that changes their idea of value for sure, and not in a good way.

Rose, it is hard for people to get that, but it is routine maintenance. And yes, it won't be a downward negotiation at the end of the day.

Sussie, thank you for the complements! And I hope it helps you out.

Richard, why thank you!

Jon, I am always honored when someone learns something from my writings, so thank you!

Tom, it is very, very rare indeed.

Roger, my wish for you and your family is that they will understand that they should listen to you as you know what you are talking about.

Margaret, that is so true. And if you don't.... you will help to sell the house down the street.

Debbie, great point! And I didn't realize about carpeting, interesting indeed.

Kathy, there are so many facets to pricing a home, I know sometimes sellers are very upset because we don't see the value as they do.

Mike, thank you. People do get upset when I tell them it was all routine maintenance. I can understand the feeling and try my best to get them to understand. What I don't understand is when agents believe that maintenance is updating or upgrading.

May 01, 2012 10:09 PM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

I did a post on this last year with the same questions. Home Depot & the like make it a great sales pitch that your home will be worth more but in fact - you are just keeping it in good condition & 'marketable'.  You have to have a new roof, etc in order to keep your home from decreasing in value.  All homes need a certain amount of maintenance & that is that. So does your car!  Tires, oil, gas & we don't keep adding that to the base price of the car. 

There is also the ridiculous fact that every year there is some study that tells homeowners how much more they will get by putting in a new front door. What? You have to have a front door & I've never given anyone any more $$ because they have a new one!  Looks better, makes the buyer feel better but no price increase there for the seller.

May 01, 2012 10:24 PM
Kathryn Maguire
GreatNorfolkHomes.com (757) 560-0881 - Chesapeake, VA
Serving Chesapeake, Norfolk, VA Beach

This is such a hard concept for most sellers to grasp.  The issue is there are a lot of contractors who try to convince folks that they will get the money back when they go to sell.

May 01, 2012 10:39 PM
James Quarello
JRV Home Inspection Services, LLC - Wallingford, CT
Connecticut Home Inspector

What a great explanation of home value and maintenance. I just inspected a house with a serious water infiltration problem. The drainage system in place is inadequate with many issues. The listing agent presented a quote from a basement water control company. He stated the price of the house would have been more if they had installed the system. I didn't see it then, and I certainly don't see it now after reading your post. 

May 01, 2012 10:44 PM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Andrea, this is a very good point. Maintaining a property will make a home more salable and put it at the top of the comparable sales.

May 01, 2012 11:03 PM
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

You make solid points and I have often told people that while they spent money to take care of their property, it may only mean that it will sell quicker than the one who did not...but then, you never know in Real Estate..All deals are different...good post here Andrea...

 

May 02, 2012 12:17 AM
Sandy Acevedo
951-290-8588 - Chino Hills, CA
RE/MAX Masters, Inland Empire Homes for Sale

Hi Andrea, so true. And so many times people wait until they are going to sell to do many of the things you describe. Since they are not going to get dollar for dollar back, do it for yourself to enjoy before you are even thinking of selling.

May 02, 2012 02:25 AM
Tammie White, Broker
Franklin Homes Realty LLC - Franklin, TN
Franklin TN Homes for Sale

It seems we wrestle with this issue more than we should. Although, new windows are a bonus to the buyer, sellers won't see the ROI they would on other improvements.

May 02, 2012 06:35 AM
Adam Tarr
MavRealty - Phoenix, AZ
PC -GRI, ABR, CDPE, RSPS, ePro - Designated Broker

It's not just a matter of the dollar amount, but whether a potential buyer will even offer on a property with deferred maintenance.  Sometimes a buyer only has enough for the down payment, closing costs and maybe new cosmetics for the home. But if they know that it needs a new roof or other major component within a couple years, they may not even be willing to offer.  Sometimes it's the things you don't hear about, like the offers not submitted that really tell the story.

May 02, 2012 07:15 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Andrea

Lots of good lessons here. I suspect most sellers are confounded by all this and don't look at it the way they should. And doing the right things, whether it yields much more in price does help to get the home sold as compared to those showing lots of deferred maintenance. Little issue with septics in my general area but roofing is always a hot issue.

Jeff

May 02, 2012 07:56 AM
Jan Green - Scottsdale, AZ
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Great post!  You have a good way of discussing the "upgrades" as routine maintenance.  Oftentimes, sellers think they will get more for their home for doing routine maintenance.  I'll use your approach the next time this comes up. Thanks!

May 02, 2012 08:25 AM
1~Judi Barrett
Integrity Real Estate Services 116 SE AVE N, Idabel, OK 74745 - Idabel, OK
BS Ed, Integrity Real Estate Services -IDABEL OK

Andrea, a truly great article on a topic that needed to be addressed.  Wonderfully written and explained.

May 02, 2012 11:55 AM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730
Great post. And of course there is the fact that some upgrades are for personal enjoyment and that shouldn't be discounted.
May 02, 2012 12:46 PM
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

I think you have raised some interesting points.  However, I think from the point of view of the buyer, a new kitchen may only cost about $10-15K whereas a new septic will cost $25K....

May 02, 2012 01:08 PM
Janna Scharf
Keller Williams Realty Coeur d'Alene - Coeur d'Alene, ID
Coeur d'Alene Idaho Real Estate Expert

Very intelligently and clearly stated.  It really isn't rocket science, is it?  Your seller clients are in very good hands!

May 04, 2012 04:00 AM
Karen Hawkins, MBA - Langley & Surrey, BC
Royal Pro Real Estate Network - Langley, BC

Andrea, what a comprehensive description of how to discern the difference between update, upgrade and routine maintenance - a very valuable resource for sellers (and buyers!).  I think it's the 'sticker shock' that many folks have with the typical routine maintenance (ie septic, roofing, painting) that makes them think it equates to upgrades (ie higher ROI)...your post really clarified the distinctions!

May 15, 2012 04:33 AM
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

The problem with the general population is they think every dollar they spend on their home should come back to them. Many of the improvements may help salibility but not change the bottom line by much.

May 19, 2012 09:37 PM
BRAD NEWTON-Pittsford NY- CBR®-SFR®-SRES®-Lic. R.E. Salesperson
RE/MAX Realty Group - Pittsford, NY
Helping Rochester Families Make the Right Move !

Andrea I agree intirely.  Saleability is the key and buyer confidence.  Most buyers want to upcharge for a new roof when writing an offer.  It still is hard to sell to the seller that putting a new roof will help more than hinder the sale of their home.  They don't get the concept that there may be underlying issues below roof level that will get found by quality inspectors.

Aug 27, 2012 03:36 AM