I was on a listing appointment last week and I was amazed at the kitchen remodel. The seller had used his equity line redo his kitchen. Granite counter tops, custom maple cabinets, new center island with a cook-top, and hardwood floors really make the home shine. In addition to the kitchen the home owner put a new roof on the home and replaced the furnace. The work totaled 35k dollars. In addition to the equity line the owner has a first mortgage of 205k dollars.
The owner purchased the home for 201k in 2004. This home is a typical 1960's rambler in a first ring suburb that was very flat in 2006. It has 3 bedrooms on the main level and 1 full bath that has not been updated. The lower level consists of a large family room and utility room. After doing a very detailed market analysis, I found the the home will more than likely sell in the high 220's. The average price in the neighborhood is around 220k which included 3 bedrooms and 2 bathrooms. The owner is selling because of a job transfer and promotion. I racked my brain looking for comparable home sales in the 240's and 250's.
The crux of the problem is the lack of a second bath. Two break the 230 barrier this home needs a second bath. The seller basically miscalculated the importance of a second bath. To their credit, the kitchen is awesome but does it really increase the value of the home? Well, in this case the combination of the total cost of the kitchen project and the lack of a second bath has weakened the seller's position. It is a matter of Practical vs. Impractical. Second bathrooms are more prevalent than granite counter tops.
The moral of the story is always think of function and resale. Take a look at home values in your neighborhood. Ask your Realtor's input about what improvements make the best sense.
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