A princely townhouse near the historic Washington, D.C., neighborhood of Georgetown just sold for more than $550 per square foot. Among its many features: two-sided gas fireplaces, spa-like bathrooms and an elevator. Topping it off is a rooftop deck overlooking the Washington Monument.
Given the uncertainties of the current real estate market, the nervous owners of this plush property volunteered many concessions. They kept the price a notch below market and even gifted the buyers a houseful of designer furniture. Still, they avoided excessive renovations that likely would never have paid them back at the closing table.
Ronald Phipps, a past president of the National Association of Realtors (nar.realtor), doesn’t know the sellers of this opulent townhouse. But he credits them for avoiding over-the-top presale improvements.
“When picking home improvements, you want to be pragmatic and practical, not exuberant and carefree,” Phipps says.
A veteran of the real estate field for more than four decades, Phipps says it’s particularly unwise to overspend on presale upgrades during this phase of the economic cycle when a recession could be looming.
What commonly happens is that owners who try to recoup the cost of excessive presale improvements find the price they’re demanding is too high. Hence, their property is likely to sit unsold for a lengthy period until they take a price cut.
Sometimes sellers commit the double error of both overimproving and personalizing the improvements to such an extent that buyers are repulsed by the changes.
For instance, Phipps cites an interior designer who spent more than $30,000 to install such dramatic decor in his place that one prospect “literally became nauseated when she walked through.”
“Each room assaulted your senses. Picture a French provincial dining room with blue flocked wallpaper next to an all-steel-and-glass kitchen. Also ... a family room painted fire-engine red with blue lights on the ceiling,” Phipps remembers.
The sale of this “surreal” property proved problematic and, despite the owner’s expenditures, the place ultimately sold for a disappointing sum.
“Buyers view houses like this as ‘fixer-uppers.’ They typically sell for 10% to 15% under their market value,” Phipps says.
Here are pointers for sellers:
-- Seek a checklist of improvements from your real estate agent.
Real estate specialists divide problematic sellers into two categories: those who refuse to spend any money for presale improvements -- even critically important cosmetic ones -- and those who spend excessively or misappropriate their dollars.
“Before you sell, the key is to distinguish between changes that give you a big bang for your buck and those that simply represent money burned,” says Eric Tyson, a personal finance expert and co-author of “Selling Your House for Dummies.”
To come up with a focused plan for presale improvements, Tyson advises sellers to ask their agent for a written checklist.
“A good agent will know which improvements are needed and justified and which are not. By doing a written checklist, it’s more likely your agent will be thorough and not simply gloss over the highlights,” he says.
-- Abandon any plans for a presale addition.
Are you the owners of a large house with an undersized family room? Do you plan to expand your family room in hopes of making your place more salable? Would this make sense?
“The answer is normally ‘no.’ In most cases, it’s not cost-effective to knock out walls to build an addition,” Tyson says.
He says those who attempt a presale addition rarely recoup more than 50% to 60% of the money invested. Moreover, any construction project that involves the removal of walls can be very time-consuming and stressful.
“Usually, the only time homeowners are smart to do a presale addition is to replace an addition that was badly done or is an eyesore,” Tyson says.
-- Restrict your upgrades to neighborhood standards.
As your listing agent will likely tell you, your kitchen is a high priority when it comes to presale improvements. If it’s a turnoff to buyers, many will pass on your place.
“But the idea in your kitchen, as elsewhere in your house, is to meet but not exceed neighborhood standards,” Tyson says.
In a luxury neighborhood, new quartz or granite countertops could make sense. Also, new designer hardware could also be worth the expense in your kitchen, as could new upscale flooring.
Still, there are limits on how much you should spend in your kitchen, even if you’re selling in a high-end community.
“Most buyers won’t care that you’ve done a second major kitchen renovation. For instance, few are justified in adding an under-the-counter ice maker, a wine storage center or a second dishwasher,” Tyson says.
-- Accentuate the look of your yard.
The landscaping around your place is like the frame around a painting. It defines the entire image of the home.
But upgrading your landscaping need not be costly, assuming you’re resourceful.
“You’ll want to trim your shrubs, and you’ll definitely, absolutely want to remove dead plants. A dead plant is a real turnoff,” Tyson says.
For replacement plants, Tyson suggests you turn to a local nursery for free guidance on plant selection and design.
Or look to a helpful neighbor with a green thumb.
Most sellers can dramatically improve the curb appeal of their property by cutting back or replacing any overgrown shrubbery that shrouds their property. But you don’t need to install exotic plants or dazzling fountains.
“Ripping out your whole landscaping plan and starting over is almost never called for. When it comes to your yard, you can greatly improve its looks for relatively little money,” Tyson says.
(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)