Should Sellers Upgrade Their Kitchen and Baths Before Selling?

Good morning William Johnson ,

I was so glad to see a post from you! You have indeed been missed!! Of course your past clients called you..you give logical and sound advice and they respect your years of experience and expertise! Great post..right on..professional kitchen and bath upgrades are attractive to buyers. They will often over look lack of other features if these areas are upgraded.

Great point:

Buyers are attracted to a home that has been professionally upgraded in the key areas of the kitchen and Baths

Yes, this is tricky business as you generally do not get your return on a full overhaul.  Actually, the main reason for this is that different people have different tastes and hence value things differently.  The kitchen is a perfect example - look at the diversity of colors and tastes in cabinets, countertops, floors, backsplashes.  If a new buyer spent their own money, they would get exactly what they want (and/or can afford) whereas a seller can never pick out what a potential buyer would want.

BTW, there are certain elements in the kitchen that you do get your money back.  The easiest one is upgrading appliances - usually a 1:1 return, while generating more appeal/selling faster.

Hi William, We all know if a buyer had to choose between two houses, all things being equal but one has an updated kitchen and bath, and the other not, the updated house almost always wins.

William, We have found that several of our buyer-clients specifically ask for properties that are in good condition and that DO NOT have updated kitchens and baths. They want to design those themselves. Interesting buyer perspective.

From the seller's standpoint, if they have the time and money to facilitate these changes and there is at least a break-even possibility, I believe the property would sell faster with the updates. Good post, thanks.

Yes to doing this if one can do it...the results and the return will be there

When you are in a small rural market with down close to the ground real estate property listing prices, ease up on the suggestion to tweak the bath or kitchen. The $20,000 and $30,000 buyer is not expecting granite and quartz counters in the kitchen, or two bathrooms per bedroom that other areas see as the market norm. Every real estate market hums and buzzs, purrs so so differently and the size of the price does matter. Less layers of players the lower you go on the real estate property listing price dial William Johnson !

My short answer is yes they should consider upgrading those areas only if they know they won't be outpricing themselves and throwing that money away. If the house is good enough to sell as is then clean it and stage it. 

William, Of course they would not consider anyone else to handle their property. You know the local market and you know the cost vs return.

William - great post!  Do you think there is a correlation between first time homebuyers & them needing/wanting updated kitchen & baths?  Or, is this a trend that EVERYONE looks for?  I can see the benefit of a house being move-in ready, but at the same time, it may not be to the buyer's taste!  I feel like this is completely dependent on the buyer!  

Sometimes easy updates rather than full-on remodeling can work well to sell a home.  Kitchen cabinets can be painted, new hardware installed, wood floors refinished, new light fixtures hung, and for a very reasonable cost the seller would most likely get an excellent ROI.

Although there is no doubt that buyers generally prefer a beautifully finished kitchen and baths, I don't always recommend that my clients do this.  

It depends on so many factors including the condition of the rest of the house, the available space, budget, and timing.  

Very well written and thought out, William... It all depends, doesn't it?!?!

NO!!!  Spend the money on your new home !    ROI - run this one as a business answer and it usually comes out as NO.  Therefore..... no :-)

Great post William.  I do a lot of this. From my experience, the answer is.... it depends.

It depends on the added value equation, the condition of the property, competitive properties for sale and market conditions - a cost/benefit analysis. There are no general or universal rules.

In some cases, the $ used to remodel and renovate can fetch so many more $ in the sale. Case in point, my partner and I had a listed house in its original condition would sell for $800,000 or so. We suggested $45,000 of improvements, which were done, and we sold it for $1.1M. That was money in improvements well spent.

In some other cases, the remodeling and improvements cost more that the added-value on the sales price.

So the cost/benefit ratio has to be calculated and evaluated on a case-by-case basis.

We live in an extreme buyers market so competition is fierce. With borrowing money being so cheap, buyers want their homes updated and move-in ready so everything is included in the mortgage and not have to deal with the work involved and taking money out of their monthly budget to complete the work. In our case, the more work completed before listing, the better.

I think when selling we need to look at the return on the investment on the kitchens and bath, will they recoup it - no one truly knows - will it sell faster and appeal to more buyers (maybe bringing a higher price) YES YES YES!

Wiliam

I think it depends on the current condition as well as what you actually do to it. I have seen some well-done upgrades to kithens and baths, and others that were so unique that they were almost more of a turnoff, and a buyer would have to spend money fixing it, on top of the premium the seller is asking becuase of all they did.

Will an updated mitchen and bath show better and be reflected in a better price? No doubt, but it sure isn't likely to be 100%

Jeff

William Johnson - to an extent, the basic kitchen and bath which are 'functional' does not add any extra value to the house.

When it comes to added value for these upgrades, you are right - appraisers may not look at what extra it has to offer. However, in this market, good home does get multiple offers and possibly, some of the buyers are willing to let go some contingencies.

If the location is desirable, upgrades should add value - just my two cents.

Homes with updated kitchens and baths will certainly sell faster (if priced right), although the sellers may not get 100% on their investment. It's the time value of money.