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Should I remodel my house or Sell it in its current condition?

By
Real Estate Agent with KW Advisors BRE 01456626

 

 

After exchanging several emails, I found out that both the Mother-in-law and the house were 100 years old when she passed away. I was told that there had been very little updating done to the house in the past 50 years.

The various family members were at odds over whether they should do some work to the house, or just sell it in its current condition.

When you see the video, you will see that the house was in very poor cosmetic condition. It’s too bad that I waited a few days to take the initial photos. I really wanted to show the 1970’s artificial grass laid over a concrete slab in the front yard. In the middle of this fake grass was one of the biggest, most overgrown junipers that I have ever seen. By the time that I took the photos, the landscaper unfortunately had already removed much of this.

After the family decided that they would hire me, I started getting quotes from my various team members/contractors on what it would cost to renovate this house. I wanted to be able to give the family an option between selling in its current condition and fixing up the house.

I brought in my Stager first (Kerry Roth of Décor Staging). She is the one who helps me create a vision for the house, while maintaining a budget. After Kerry helped me come up with an idea of what needed done, I got quotes from my: Painter, Hardwood Floor Refinisher, Landscaper, Handyman, General Contractor, Vinyl Flooring Contractor, Carpet Installer, etc.

The total of all of the quotes was $25,945. Given the condition of the house and my experience in fixing homes to sell, I knew that we could do a pretty decent remodel for that amount.

I sat down with the family and showed them my figures:

Option 1 - Do nothing to the house, except for cleaning it out and it will sell for around $750,000.

Option 2 - Invest $25,945 in a basic remodel and it should sell for around $850,000.

None of the family members lived in the local area, so their concern was managing the project. I explained to the family that since it was our crew, Kerry Roth and I would set the schedules, oversee the work and manage the construction budget. The family only had to pay for the contractors and materials. Once the family realized that it would be no extra work for them and that their $25,945 investment would increase the sales price by $100,000, they agreed to our plan.

The project took 1 month as we had expected and cost $26,291, or $346 over our original budget. We only went over budget because of the $600 repair of a roof rafter in the attic. (We didn’t know about the crack until after we had the house inspected). Even with the slight overage, the family was pretty happy with our ability to stay close to the budget.

Throughout the project, we faced several challenges that could have significantly increased our costs. Two of them were:

  • The kitchen was original from 1912. If you have seen early 1900 kitchens, you will know what I mean. It was basically 2 rooms. One room had the sink and a cabinet and the other part contained the stove and refrigerator. It was really not functional by today’s standards.  We could have spent our entire budget on the kitchen alone. Instead, we opted to just paint the kitchen and spend the budget on the front part of the house. Kerry Roth’s (Stager) idea was that we should make the front part of the house look so nice that buyers forget about the kitchen.
  • The living room and dining room had old wallpaper over the original lath and plaster. The painter had originally quoted to remove the wallpaper and then paint. He called me one day and said “Chris, the plaster is coming off when we remove the wallpaper. There is no way that we can remove it all without having to replace all of the plaster on the walls. This is going to be very expensive”. After discussing several ideas with him, we decided to leave the wallpaper and just paint over it. Normally you can’t just paint over wallpaper, because the moisture in the paint causes the wallpaper to bubble. The Painter suggested that we use a special primer which would essentially bond the wallpaper to the plaster, keep it from ever bubbling, and allow us to paint over it. After the painting was done, it looked like a brand new wall.

As we faced each challenge, Kerry and I looked at them from the standpoint of “How can we fix this without breaking the budget and still make the house look great.”

We put the home on the market for $800,000. Now, you may wonder why we put the house on the market for $800,000, rather than the $850,000 that the family really wanted. The strategy which works best in our market is to list the property a bit low, generate lots of interest and then get multiple offers which are significantly over the asking price. This typically gets a seller more money than they would have gotten if we had listed at a higher price in the beginning.

After doing the standard Open Houses, Broker Tours, and about 7 days on the market, we received 3 offers. After several rounds of counteroffers with all 3 agents, the Sellers settled on a very good offer for $850,000. This is the exact price that they had been hoping for.

The rest of the sale went very smoothly and we were able to close escrow on time.

All of the family members ended up happy. They were pleased with their decision to invest $26,000 to get $850,000, rather than just settling for $750,000 with the house in its original condition.

If you ever know of anyone on the Mid-San Francisco Peninsula who is considering just selling their house as is or fixed up, give me a call. I will let them know if I can do the same thing for them as I did for these sellers.

 

Video Link: http://youtu.be/dG2DHT5qw4E

 

Posted by

Chris Eckert
Chris Eckert Real Estate Team
www.chriseckert.us
650.627.3799
DRE 01456626
16 E Third Avenue, San Mateo CA 94401 

 

Comments (2)

Pete Xavier
Investments to Luxury - Pacific Palisades, CA
Outstanding Agent Referrals-Nationwide

Great deal Chris, it always pays to have a much needed rehab.

Nov 28, 2012 03:02 PM
Caroline Gerardo
Licensed in 20 states - Newport Beach, CA
C. G. Barbeau the Loan Lady nmls 324982

Fabulous video and show and tell.

I have remodeled many houses. I wish I had video of the "before-s" ...

I hope you won't mind if I share this (giving you credit) - demonstrates an

listing agent doing EVERYTHING in the best interests of his clients. Bravo

Jun 09, 2013 01:32 AM