The difference between a selling point and a price adjustment!

By
Real Estate Broker/Owner with Richard Weisser Realty

Upgrades do not necessarily affect the price of a property!In the HGTV era of real estate sales, I run into a lot of sellers that insist that every upgrade that they have ever made should increase the value of their home.

However, here in Coweta County Georgia, that is simply not the case. Stainless steel appliances or granite countertops or hardwood floors may really make a house stand out. And a well maintained home with many upgrades may be just the thing to prompt a fence-sitting buyer into action.

But these enhancements do not translate directly to price. And while they may garner a modest premium by narrowing the degree of wiggle room in the negotiation process, the rate of return on expenditure is fractional.

And many items, such as a new roof or a new HVAC system are maintenance items, and do not add value either. Buyers expect a roof and an air conditioner when they purchase a property, so these details are indeed inducements but may not affect the market value of the property.

Homeowners should only consider upgrades for their personal enjoyment and lifestyle, and not as an investment. And they should perform all necessary maintenance as it is warranted.

The bottom line is the bottom line! And there is no workaround for over-improvement.

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Gabe Sanders 11/23/2010 12:50 AM
  2. Susan Haughton 11/23/2010 03:52 AM
Topic:
ActiveRain Community
Location:
Georgia Coweta County Newnan
Groups:
Realtors®
The Lounge at Active Rain
"Whacked"!!!
Club Chaos
Diary of a Realtor
Tags:
price adjustments
selling points

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Ambassador
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Richard Iarossi
Coldwell Banker Residential Brokerage - Crofton, MD
Crofton MD Real Estate, Annapolis MD Real Estate

Richard,

I do upgrades to my house now so I can use them. I recently had a seller who wanted to recoup the $9,000 he spent on a screened in porch...30 years ago. Not gonna happen.

Rich

Nov 23, 2010 12:33 AM #5
Rainmaker
1,540,327
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

I'll second that! Down here I am constantly telling folks the same thing about a pool....install it if you are going to enjoy it but don't expect a dollar for dollar return!

Nov 23, 2010 12:34 AM #6
Rainmaker
4,798,519
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Richard, great point and a very important lesson that all sellers should keep in mind.  By the way, I'm now referring my price changes as a 'market repositioning'.

Nov 23, 2010 12:47 AM #7
Ambassador
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TeamCHI - Complete Home Inspections, Inc.
Complete Home Inspections, Inc. - Brentwood, TN
Home Inspectons - Nashville, TN area - 615.661.029

Richard, true. It does depend upon the market area. Stainless steel, granite and hardwoods certainly help in this area...

Nov 23, 2010 01:01 AM #8
Rainmaker
2,344,477
Anita Clark
Coldwell Banker Access Realty ~ 478.960.8055 - Warner Robins, GA
Realtor - Homes for Sale in Warner Robins GA

South of you in Houston County GA buyers want the upgrades...as many as they can get.  Unfortunately, when sellers try to recoup all the money they've put into the house the property often sits.

Maintain as necessary, upgrade for yourself, and sell without emotion...sure wish it was that easy!

Nov 23, 2010 01:10 AM #9
Rainer
278,211
Kathryn Maguire
GreatNorfolkHomes.com (757) 560-0881 - Chesapeake, VA
Serving Chesapeake, Norfolk, VA Beach

Very well stated. And it runs counter to what many home improvement companies tout as dollar for dollar returns.  It does create unrealistic expectations for home owners.

Nov 23, 2010 01:16 AM #10
Rainmaker
1,144,112
Paula McDonald, Ph.D.
Beam & Branch Realty - Granbury, TX
Granbury, TX 936-203-0279

I so agree with you on this Richard.  Bottom line, a well maintained and CLEAN home go very far when putting value on it. 

 

Nov 23, 2010 01:33 AM #11
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Gerry Michaels
Glasswork Media Arts - Gettysburg, PA
GettysburgGerry Social Meida

Very well put, I have had two listings this year that the owner way over upgraded and there was no way to sell for a price they could recoup the money spent. Great points, and I agree with Paula, neat and clean go a long way toward selling

Nov 23, 2010 01:40 AM #12
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Tammie White, Broker
Franklin Homes Realty LLC - Franklin, TN
Franklin TN Homes for Sale

In our area, buyers expect that things like hardwood floors, granite countertops and stainless steel appliances should be standard in homes. They are not usually paying more for these upgrades but they will definitely pay less is they don't see these.

Nov 23, 2010 01:52 AM #13
Rainmaker
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Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in Southern RI and beyond
My goodness Richard I do hope the sellers hear this one...it is all about maintaining that makes the difference & does not add much to price....presentation, price, demand & location is what is working here...best
Nov 23, 2010 02:11 AM #14
Rainmaker
1,816,979
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in Southern RI and beyond
My goodness Richard I do hope the sellers hear this one...it is all about maintaining that makes the difference & does not add much to price....presentation, price, demand & location is what is working here...best
Nov 23, 2010 02:11 AM #15
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Richard Weisser
Richard Weisser Realty - Newnan, GA
Richard Weisser Retired Real Estate Professional

Point of claricication...

When I say "upgrades" I am talking over and above the norm for the neighborhood. If granite and stainless are "standard" in a neighborhood, one would have to go beyond that to upgrade!

Nov 23, 2010 02:38 AM #16
Rainmaker
313,793
Glenn Roberts
Retired - Seattle, WA

And over-improvement for the location never gets back what the seller put in. Many nouveau filppers continue to make that mistake.

Nov 23, 2010 03:05 AM #17
Rainmaker
1,027,150
Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

In some markets, what used to be considered "upgrades" are now standard fare, no matter how much money the seller spent.  Great post, I'm reblogging.

Nov 23, 2010 03:56 AM #18
Rainmaker
3,985,513
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Maintenence are not improvements.  Improvements will not alway net the seller as much as they cost!

Nov 23, 2010 08:13 AM #19
Rainmaker
631,325
Nancy Conner
Olympia, WA
Olympia/Thurston County WA

You make such important points here that all sellers should read - and heed!  Another one I run into frequently is the seller who has created landscaping that is so elaborate that it may actually be a negative for some buyers who only see lots & lots of work to maintain it - or lots of cost to pay someone else to maintain it.

Nov 23, 2010 09:20 AM #20
Rainmaker
1,132,617
Claude Cross
Homes By Cross, Inc. - Charlotte, NC
Charlotte NC Homes For Sale

Richard - To Formica or not to Formica...That is the question.   (outside of price)

Nov 23, 2010 09:51 AM #21
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Liz and Bill Spear
RE/MAX Elite 513.520.5305 www.LizTour.com - Mason, OH
RE/MAX Elite Warren County OH (Cincinnati/Dayton)

Richard, A hard lesson learned by many sellers, a dollar spent does not a dollar return.  Do it because you enjoy it (within limits, don't destroy the resale of your home just because YOU like something!).

Nov 23, 2010 01:45 PM #22
Rainmaker
2,558,590
Rebecca Gaujot, Realtor®
Vision Quest Realty - Lewisburg, WV
Lewisburg WV, the go to agent for all real estate

Richard good points. We are in the process of renovating our condo in Arlington VA...all the other units have renovated their kitchen...with the standard granite and that is what we are doing before it goes on the market.

Nov 23, 2010 02:40 PM #23
Rainmaker
388,769
John Walters
Frank Rubi Real Estate - Slidell, LA
Licensed in Louisiana

Richard well said.  We bought an older home and upgraded it quite a bit.  My wife thinks it's worth a whole lot more than i do if we tried to sell it.  She doesn't believe me when I tell her what i thinks its worth.

Nov 24, 2010 05:57 PM #24
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