Smart Moves by Ellen James Martin

Getting the Most Out of Pre-Sale Renovation

A couple of years before the real estate downturn hit, a big city pediatrician bought a modest townhouse in a rapidly developing outer suburb where he’d been offered a job. But the job proved disappointing, as did life in exurbia. Hence, after converting the property to a rental, he moved back to the city.

Recently, the doctor decided to finally sell the townhouse. Yet, after interviewing three listing agents, he was unhappy with what he heard. Despite the overall lift in the housing market across the country in recent years, home prices in his area had gained relatively little. Indeed, his house would still sell for less than he paid for it 10 years ago.

As this true story illustrates, not all homeowners have benefited equally from the rising post-recession real estate market. Prices in many close-in metro areas have soared, while some less popular outer suburban communities have gained little.

“Even as headline numbers show an overall recovery, there are still thousands of Americans struggling to bounce back from the housing bust,” says Svenja Gudell, the chief economist for Zillow, which tracks real estate markets throughout the nation.

What does this mean for sellers like the doctor? It means they should be doubly careful to price accurately from the outset and not overspend on pre-sale improvements. Otherwise they could be hurt at the bottom line, says Mark Nash, a real estate analyst and author of “1001 Tips for Buying and Selling a Home.”

No matter the market, listing agents rarely recommend that clients undertake major remodeling work prior to selling. But if the sellers insist on pre-sale improvements, they’re urged to first consult experienced real estate agents for advice.

Here are a few tips for sellers:

-- Find a real estate agent with a deep knowledge of your neighborhood.

Nash, a long-time real estate broker, says sellers who plan to renovate should first seek guidance from agents who truly know their community.

“Only contact agents with an in-depth knowledge of your particular market and its tastes. Ask them the types of projects that will or won’t pay you back when you sell,” Nash says.

Homeowners who are unsure when they’ll sell are often reluctant to ask for advice before remodeling. But Nash says reputable agents won’t pressure you to list your property until you’re ready. Meanwhile, their advice could save you thousands of dollars in contractor charges.

“Real estate people can often put you in touch with local contractors who do good work for a low price. Through their clients, they pick up the names of contractors who are solid yet inexpensive,” Nash says.

Ask any agent who visits your home to go room-to-room, creating a checklist of updates that should enhance the value of your property rather than hurt it.

“Always keep your eye on the big prize, which is a successful sale,” he says.

-- Don’t overshoot your neighborhood on improvements.

Tom Early, a past president of the National Association of Exclusive Buyer Agents (, says that buyers, who do more internet research than ever, will refuse to compensate you for any renovation work that raises your property above neighborhood standards.

What kinds of upgrades constitute “over-improvement”? One example would be an expensive landscaping job in a neighborhood of starter homes. Another would be the addition of a three-car garage in a neighborhood where most houses have no garage at all.

-- Resist the temptation to personalize your renovations.

Nash tells the true story of a psychology professor who was determined to completely overhaul the kitchen of her house before selling. She had in mind dark cherry cabinets and top-quality granite countertops, and expected to spend nearly $90,000 on the work.

But after consulting Nash, the professor changed course, scaling back her kitchen plans and making them more suited to the tastes of the young families moving into her neighborhood.

“Most people who buy homes in that neighborhood have young kids. They want a more functional sort of kitchen than this owner contemplated,” he says.

“Not only did she spend half as much as she would have for her original kitchen design, but she made her property much more suitable for a future sale,” Nash says.

-- Back out of renovation work that’s overly pricy.

Have you already launched into a remodeling project, but worry you’re spending more than you could realistically recoup when you sell? If so, Nash urges you to contact your contractors and negotiate a change in plans.

Often, real estate agents can suggest less expensive products than those recommended by contractors. For example, they might recommend you replace worn carpet with a generic brand rather than one from a designer showroom.

Besides substituting supplies, your contractors may be willing to renegotiate the overall scope of your project. For instance, you might cancel plans to install a fireplace in your family room.

“Even after paying penalties for canceled work, you’ll probably come out ahead if you contain your enthusiasm for fancy upgrades,” Nash says.

(To contact Ellen James Martin, email her at