America is suffering a severe shortage of quality homes for first-time buyers. So, when an experienced real estate broker put her modest Cape Cod up for sale, she was surprised it languished unsold for two months without a single bite.
To address the problem, the broker, Julie Tuggle, swung into action. She replaced worn carpet with dark hickory flooring throughout the house. Also, she upgraded the kitchen with new appliances and granite countertops.
All told, Tuggle spent $6,000 on improvements before raising the list price for the property by $10,000. Despite the price increase, once back on the market the place sold immediately.
“It was amazing. I had people fighting over the house,” she says.
A broker since 1985, Tuggle knows which improvements can hasten the sale of a property and which offer a poor return on investment. For sellers, she says the best bets are cosmetic improvements that can transform the look of a home for a relatively small sum. These include fresh paint, new flooring and kitchen upgrades.
What’s important for sellers, she says, is to distinguish between presale improvements that are worth the cost and those that are overkill and a waste of money.
“To get a house sold, I wouldn’t go beyond neighborhood standards. In most cases, that means it wouldn’t be advisable to replace windows, build on an addition or add a swimming pool,” Tuggle says.
Mark Nash, a real estate analyst and author of “1001 Tips for Buying and Selling a Home,” urges sellers to make sure they spend the money for necessary repairs to a property, even if they’re in a strong seller’s market.
Here are a few additional pointers for sellers:
-- Ask three real estate pros for guidance.
Nash says that before they commit to any remodeling projects, it’s wise for sellers to discuss the work they’re considering with real estate people who know their area.
He recommends you contact three local agents for advice on which home improvement projects are truly worth the expense. Most well-established agents will visit your house and advise you. even if you don’t intend to sell for another three to five years.
“Good agents are in their field for the long term. They’re not just looking for a quick sale,” Nash says.
As an added benefit, he notes that many agents maintain a database of reliable contractors.
-- Determine neighborhood norms for your area.
Tom Early, a longtime real estate broker and past president of the National Association of Exclusive Buyer Agents (naeba.org), says current buyers won’t pick up the tab for any renovation work that raises a property above neighborhood standards.
“These days everyone, including those buying in hot neighborhoods, are savvy shoppers who know what homes in your area are going for. You can’t fool them into paying a premium for an over-improved home,” Early says.
What sort of upgrades constitute “over-improvement”? For example, you wouldn’t want to install high-end, designer light fixtures in a neighborhood of starter homes. By the same token, you wouldn’t want to construct a three-car garage in a neighborhood where most houses have no garage at all.
-- Cancel projects that prove too expensive.
If you think your contractors are going over the top, Nash says it’s better to stop projects before they’re finished than to overspend on work that will cost much more than expected.
“For example, most buyers don’t care if they get super appliances in the kitchen or laundry room. It’s the basic house and floor plan they’re looking for and not high-end elements in every room,” Nash says.
As he points out, real estate agents often recommend the use of less expensive products than are suggested by contractors. For example, you don’t need to spend your money on top-of-the-line carpeting when a mid-level grade will do just as well. Or you might wish to opt for generic hardware in your kitchen and bathrooms.
“It’s true that bailing out of work with a contractor can cost you a penalty. But doing so might still be the wise course if a project has become too ambitious,” Nash says.
-- Slow the renovation process to avoid costly mistakes.
As Nash notes, many home sellers realize too late that a thoughtlessly executed remodeling program can hit their wallet hard. That’s why he recommends you write on an index card the basic elements of a well-thought-out plan. Then have that index card handy as a reference guide when contractors come over to do estimates.
“Sure, you want to sell your house quickly and for the maximum amount of money. But haste can mean wasted dollars. It’s far better to proceed thoughtfully than to rush headlong into changes that could push you over your budget,” Nash says.
(To contact Ellen James Martin, email her at email@example.com.)