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Updates & Upgrades Value to Sale

Why Expensive Renovations May Not Boost Your Sale

Though home improvement adds value to a property, your sellers don’t always have to undertake big projects to win a higher price at resale.

June 26, 2019  |   by Danielle Braff

As modest increases in inventory begin to attract more buyers to the market, it may seem wise for your sellers to undertake renovation projects to boost their competitive edge. Kitchen and bathroom upgrades, for example, are among buyers’ most desired features and can fetch a handsome return on investment, according to the National Association of Home Builders. But even as remodeling demand rises—the NAHB predicts home improvement activity will jump 1.6% and 1.1% in 2019 and 2020, respectively—some real estate professionals aren’t sold on the idea that renovating always fast-tracks a home sale.

There are two types of homes that sell quickly in today’s market: fixer-uppers and completely renovated properties, says Blayne Pacelli, a sales associate with Rodeo Realty in Studio City, Calif. You’ll need to pay attention to local market dynamics to determine the salability of each type of home in your area. For example, if your market has an abundance of investors, who typically renovate anyway for flips or rental properties, your sellers may not need to upgrade their homes in order to sell. Traditional buyers, however, may want a move-in–ready property.

In the Los Angeles neighborhood where Pacelli works, investors and traditional buyers are both aplenty. His renovation advice to clients depends on each one’s situation. “If a house is already fixed up except, say, one bathroom, I would suggest updating that bathroom to [appeal to a wide market],” he says. “If the bathrooms and kitchen need updating, I would leave them as is” and market the home to investors.

Weighing Your Options

There’s no doubt that home improvement increases property values, but renovating can be expensive—and there’s no guarantee your clients will recoup all of the costs at resale. With that in mind, you must help your clients decide: Is the expense of remodeling worth it? Small improvements rather than large-scale projects may suffice. “Timing matters as does the cost to renovate,” says Elisa Uribe, a sales associate with Golden Gate Sotheby’s International Realty in Oakland, Calif. “It is a seller’s market in our area. In some cases, minor changes such as interior and exterior painting and updating the landscaping can add a lot of curb appeal and make the house more appealing to a buyer.”

Uribe has also used virtual staging to present renovation options to buyers, relieving her seller of having to do the work. In March, she sold a client’s unrenovated three-bedroom, one-bathroom home, built in 1910, at the list price of $564,000. The sale occurred even though the seller had not updated the property’s exterior siding, windows, landscaping, and hardwood floor finishes.

The buyer was attracted to Uribe’s virtual staging of the home, which showed what it would look like with the updates and new furniture. Uribe also virtually staged the home’s layout with an additional bathroom to show buyers the renovation possibilities. “My client was out of state and didn’t have the time, or the funds, to update the house himself,” Uribe says. “The buyer was an investor who planned to update the property and put it back on the market fully renovated.”

Less Is More

Sometimes, some form of home improvement is necessary to elevate the profile of an otherwise undesirable property. In these cases, it may be best to choose simple projects with big impact, such as refreshing the paint or hardwood finish. James McGrath, co-founder of Yoreevo LLC in New York, says one of his buyers recently closed on a condo that had been extensively renovated. The seller, an interior designer, saved money by designing the remodeling projects herself, but she still spent $100,000 on the actual work, which included gutting the kitchen and bathroom among other changes, McGrath says. “If it’s not the highest price per square foot in the building’s history, it’ll be pretty close,” he says of the deal.

The renovated unit received a lot of foot traffic, with 60 to 70 showings. “That being said, the owner won’t make money on the renovation,” McGrath says. Though the renovation generated a higher price for the condo—which McGrath’s client bought for $690,000— it wasn’t enough to cover the seller’s remodeling costs, he adds. This is an example of why McGrath suggests that homeowners avoid big projects prior to selling.

Another renovation con: While the improvements may be a hit with some buyers, others may have different preferences and won’t pay a higher price for the work that was done. In fact, McGrath’s buyer brought in his own contractor because he wanted to replace the tile in the kitchen and backroom. Though the tiles were new and in pristine condition, the buyer had a different vision for the space, McGrath says. “Presumably, the seller would have gotten the same offer from [my buyer] had she not spent thousands of dollars on those tiles.”

Protect Clients’ Bottom Lines

You can help keep your sellers on budget by reminding them that “restoring the home to a good state of repair” is all that’s necessary before listing, says Michael Edlen, SFR, a sales associate at Coldwell Banker Pacific Palisades in Pacific Palisades, Calif. But that may mean something different in each market. In areas where buyers have the advantage, a seller may need to do more work on his or her home. “If an owner does not perform basic repairs, many buyers tend to ‘horribilize’ what they think they see and how much it could cost to fix it.”

If your client’s home needs an overall update, focus on the smallest items that have the biggest impact first and test it on the market before deciding to invest in larger projects. Updated light fixtures and window treatments, which are eye-catching accents, are often enough to move buyers, says Dawn Levy, a sales associate with Berkshire Hathaway HomeServices Georgia Properties in Atlanta. If your clients want to take it a step further, they can install new energy efficient windows, which can be costly but is a huge selling point with buyers, Levy adds. “A home with good bones that needs a cosmetic facelift is much more appealing to buyers,” she says. “Price point also plays a role here.”

Of course, the value of any renovation depends on your market. What works in one area may not work in another, so you must be knowledgeable about your specific neighborhood. In New York, for example, condos and townhomes that aren’t completely renovated typically don’t get much attention from buyers, says Eric Rosen, a broker with Halstead Manhattan LLC. “If the apartment or townhouse requires work, then the seller would be penalized,” he says. “This means that the property will trade for less than the repairs would have netted in a sale.”

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Thinking of Selling?

Key Questions for Owners Thinking of Selling

For many cities throughout the U.S. real estate markets, today undeniably favor sellers. With those markets that are particularly competitive, it can be very tempting to list your home even when you haven’t made a concrete decision to sell. Taking the plunge and listing can be an exhilarating decision, but doing so without asking yourself some important questions could leave you scrambling to figure out what you’re going to do should your home be a highly sought-after property.

If you’re toying with listing, ask yourself the questions below before you make your final decision.

How much is my home worth?

Unless you consistently check real estate prices in your area or are comparing comparable homes in your neighborhood, it’s likely you may not know the true value of your home. If you’re thinking of selling, it’s important to find out how much your home is worth. If you are dreaming of a new neighborhood, with the hopes that you’ll make a good amount of money off your current residence, do your due diligence and ensure your home is worth what you think. The last thing you want is to find out your home is worth less than you thought and your dream neighborhood is no longer an option. You can work with your local real estate agent to find out the current market value of your home.

How much is it going to cost me to sell?

When you list your home it can be easy to get caught up in the thoughts of how much you’ll make from selling, but selling a house does not come without costs. Selling can get expensive, especially when one considers all the outside factors that go into a home sale. Again, your local agent can help you understand the total costs (especially since many costs are dictated by where you live in the U.S. and other factors), but as a seller you can typically expect to pay these important items:

  • Agent commission (Seller typically pays Buyer AND Seller commission) (6%)
  • Staging and home preparation costs (1%)
  • Seller concessions (1-3% )
  • Repair costs (determined based on inspection)
  • Home ownership/overlap/moving costs (1%)
  • Closing costs (1-3%)

Sellers end up paying a fair share of the costs when it comes to the home sale/purchase. If all is said and done, and you’re only going to make $10,000 off your sale, is it really worth it to sell if your main goal is a good return on investment?

How long will it take to sell my home?

For some homeowners, a quick home sale is a reality if you live in a city with a competitive real estate market. But for many others, the time it will take your property to sell is really dependent on your where you live and the price and condition of your home. If your home is in excellent condition, it’s likely buyers will be immediately interested. If your house is in need of work, you might not see as many interested buyers. According to the National Association of Realtors (NAR), the median number of days a home in the U.S. sat on the market hit a new low of 29 days in April 2017. With that being the national average, your local real estate market will have its own average (that is also impacted by the condition of your home and the listing price), so there’s no concrete answer as to how long it will take to sell your home, but if you have a home that buyers want, it could be pretty quick.

Should I make repairs?

While many owners may balk at the idea of fixing up their home to sell it, the truth is that making repairs or improving your home can help sell it faster. You by no means have to make repairs when you’re toying with listing your home, but fixing up any pretty blatant cosmetic issues may help your property sell faster. It’s even a good idea to hire an inspector prior to listing to know if there are any issues with the core components of your home to avoid any surprises when it comes to a potential buyer hiring an inspector. It’s important to remember that major items, like issues with a foundation, HVAC system, or any other major part of the home, can be total deal breakers for some buyers, so make a point to assess your home prior to listing to ensure you know what you can leave as is and what you may want to fix beforehand.

Do I know where I want to go?

This is pretty important, especially if you are inclined to impulsive decisions. For some, selling a home due to a job relocation or wanting to be closer to family provides a for sure destination. But for those thinking of selling with no idea as to where they want to go, it’s a good idea to start thinking about and looking at places to move to. In those markets where homes go fast, you’ll want to have a pretty solid plan as to the area/neighborhood you want to be in, and you’ll have to be willing to compromise if you can’t find a home in your dream area. Seller contingencies are common, so don’t feel like you have to have your home sold before looking at other properties – it’s better to be on top of this than leave it to the last minute and not have a place to go once your current home sells.

Choosing to sell can be a hard decision, especially when there’s lots to consider. If you need any help, or just want to talk to someone with current real estate knowledge, your local agent is more than happy to answer questions and provide information on your local real estate market. Reach out today if you’re thinking of selling!

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10 Tricks in Preparing for an Open House

Here’s what you can do to get your home ready for its big reveal.

Few words get home buyers more excited than these two: Open House.

An open house is their opportunity to give your house a whirl. To wiggle the light switches. To admire the crown molding. To awkwardly ask to use the bathroom. For you the seller, an open house is a chance to throw open the doors. To dazzle buyers with the big reveal. To make someone fall head over heels for your charming abode.

These tricks can help you make your open house a massive hit.

1. Time It Right

Your agent will typically hold an open house for two to three hours between 11 a.m. and 5 p.m. on Saturdays and Sundays, when buyers have time and flexibility away from their jobs. To maximize your foot traffic, avoid having your open house during holidays, big community events (marathon days, for example), or unofficial “holidays” like Super Bowl Sunday.

2. Let Your Agent Take the Lead

In your own personal Open House Show, your real estate agent has two roles. To you, they are the director, giving you instructions on how to prepare for open house day, and what to do during the event. To buyers, your agent is the host. They will welcome viewers, introduce your home’s impressive features, and take questions from the audience.

Your job is to make your house look like a million bucks — or more like $300,000, depending on your price range. (Tips on cleaning and spiffing up your home in a moment.)

The job of your agent, an expert on your local real estate market and what makes buyers tick, is to take care of the rest. That will include: 

  • Staging your home, or recommending a reputable stager that you can hire

  • Hosting the open house

  • Communicating with home buyers and buyers’ agents

  • Receiving feedback during the open house and communicating that feedback to you

Your agent will also recommend that, actually, you should probably leave while they show off your house to strangers, who will look under your sinks and peek into your closets. Why should you heed that advice? Because it makes good business sense for you. 

  1. A home owner’s presence can make it awkward for the buyer. Buyers want to make assessments on their own, without worrying about how the seller might react or try to influence them. 

  2. Buyers may have trouble picturing themselves living in the house when the owner is right there, say, serving lemonade in the kitchen.

  3. Sometimes sellers say too much. You might point out something that you think is a nice feature or amenity of your home, when it’s something that might turn off a buyer. (That busy arcade bar down the block may have been your favorite place to meet friends and play Pac-Man during weekends, but it could be a deal breaker for a buyer looking for a peaceful block.) You might blurt out something that could tip your negotiating hand, like how motivated you are to sell (soon!), or that you always wanted to update the retro kitchen — but just never got around to it. 

The last things you want buyers to think after the open house is, “This place needs work,” or “This seller is desperate — I have the upper hand.” So, let your agent take the lead. This won’t be their first rodeo. They know the nuanced ways to show your home in its best light so that buyers will oooh and ahhh. They also know how to strategically answer questions from buyers to help set you up for success later, during negotiation. 

Your agent can also stage a broker’s open house on your behalf. Unlike standard open houses — where buyers can stop by — at broker’s open houses, only real estate agents and other industry professionals are invited to attend. Generally, a broker’s open is held within the first few days of a house being put on the market. Complimentary lunch is often served as an incentive to get more people to show up. 

There are two main benefits of having a broker’s open house: 

  1. It gives your listing more exposure. 

  2. It allows you to get feedback from real estate agents on your home. 

If your house “shows well,” as they say in the industry, the agents who toured your home may recommend it to one (or more) of their buyer clients. If your home doesn’t get rave reviews, your agent will relay that feedback to you, and may suggest improvements before the next open house, such as staging certain rooms.

3. Try Some Simple Staging

You want your home to look its best while it’s on the market — especially during the open house. Many agents say the best way to primp your home for its big day is to stage it.

Depending on what your agent recommends, staging may involve renting new furniture or decor for certain rooms in your home. There are also some easy staging tricks you can try on the day of your open house. Consider displaying a bouquet of fresh flowers in the entryway, setting your dining room table to make it look inviting, or turning on your outdoor sprinklers shortly before visitors arrive to make your lawn sparkle.

4. Clean Like Crazy

When your home is on the market, you need to keep it in showing shape — not only for the open house, but also for any scheduled showings with buyers. Even though you’ve already (hopefully) cleaned and organized your home for its listing photos, there’s a good chance you’ve let clutter or dust pile up again, especially if you have children or pets. 

Make sure appliances, windows, and mirrors are fingerprint-free. Clean and organize your closets, cabinets, and under the sinks (during the open house, buyers are allowed to be nosy). Clear every bit of clutter and get rid of it or put it in storage.

Don’t have the bandwidth to do a deep clean? Hire a house cleaning service to do the work for you. A professional cleaning service costs around $115 to $230 on average. If you’re not sure about which service to hire, ask your agent to recommend cleaners.

5. Do a Smell Check

If buyers get a whiff of something funky, they’re going to run — not walk — out of your open house. A week prior to the open house, ask your agent or a neighbor to do an honest, no-holds-barred smell check. Some possible smell solutions:

  • If your house has the aroma of your beloved pet(s), deep clean the carpets, relocate the litter box, and take steps to eliminate all olfactory traces of Fluffy.

  • If the basement is dank and musty, buy a dehumidifier to remove air moisture and run a fan to circulate the air.

  • If the kitchen drain stinks, drop in a cup of baking soda, then two cups of white vinegar. Enjoy the bubbling, then let the mixture sit for 20 to 30 minutes. Finally run hot water for 15 to 30 seconds to flush the odor.

6. Put Your Pictures, Valuables & Medications Away

You want your home to feel cozy and inviting, but not like someone specific (you, for example) is living there. Personal belongings such as family photos, awards, and religious art can distract home buyers and make it harder for them to imagine themselves living in your home. You don’t have to go overboard — the idea isn’t to eliminate every trace of yourself — but consider temporarily hiding some pictures and personal effects out of sight during the open house.

There’s a safety element to stowing your personal belongings, too: Though your agent will be at the open house, you’re inviting strangers into your home.

  • Securely store checkbooks, jewelry, prescription medications, family heirlooms, and other valuables.

  • Alert your neighbors to your open house date — as a courtesy, but also to ask that they let you know if they notice any suspicious activity, in the unlikely event suspicious activity occurs.

  • Make sure your agent signs visitors in and asks them to show I.D., so that you have a record of who was in your house. (Bonus: With the sign-in sheet, your agent can follow up with buyers to find out if anyone is interested in making an offer.)

  • Lock windows and doors after the open house. 

We’re not suggesting that visitors have any intention other than potentially buying your home. It’s just a good idea, generally speaking, to keep your home secure.

7. Let the Light In

Light doesn’t only (literally) brighten up your space. It also makes rooms look and feel larger. On open house day, open all curtains and blinds to let natural light in. (And in the week before the open house, make sure curtains and blinds are squeaky clean.)

Replace every single burnt-out light bulb in and outside the home — buyers should see a working light every time they flip a switch.

8. Give Your House Some Extra Curb Appeal

Buyers will judge your house on its outsides. So make last-minute improvements to turn up your home’s  curb appeal . Cut the grass, prune the trees, and trim the shrubs. Touch up porch fixtures and furniture with a little paint. Heck, paint the whole porch, if your budget allows. Plant new shrubs or set out potted flowers.

Small, relatively low-budget outdoor enhancements will make your home look all the more enticing to buyers — and can add some last-minute value to its price.

9. Draw Attention to Your Home’s Best Features

After your agent signs in and welcomes buyers to your home, they typically will have some time to wander around on their own. Even though you won’t be there, you can still draw visitors’ attention to features in your home that you’d like to highlight. 

Prior to the open house, post (friendly, aesthetically pleasing) signs around the house with calls to action such as, “look down, new hardwood floors,” or “gas fireplace, push this button.” Buyers will likely appreciate the help, and that they’re working with a conscientious seller.

10. Serve Refreshments

Serving warm cookies or freshly baked brownies at an open house is one of the oldest tricks in the book. That’s because it works: Buyers love being greeted with a sweet treat and a cold or warm beverage depending on the time of year. Refreshments also give people a reason to stay longer: No one will rush off because they’re hungry or thirsty. 

Your agent may even have relationships with a local cafe or bakery, which might offer snacks for free advertising at the open house. 

What to Do During and After the Open House

Once you’ve done everything you can to make your house look and feel amazing to buyers — and your agent is on site to assume their hosting duties — the time during your open house is yours to enjoy. Go to the park, get a three-course lunch, do whatever you like as long as you’re free to take calls.

Your agent may need to get in touch with questions, so make sure you’re available and have good cell phone reception. (A movie, for example, is not a great activity for you during the open house for that reason.)

After the open house ends, your agent will share with you what questions buyers asked and any comments they overheard by visitors. Buyers’ remarks will likely run the gamut, including some that could be negative. (“Why is the closet such a mess,” for example.) 

The important thing is to stay open to buyers’ feedback, and to follow your agent’s advice about how to respond. Based on buyers’ reactions, your agent may recommend that you make certain repairs, do some painting, or invest in additional staging before your next open house. Whatever they advise, it’s not personal — it’s just the business of selling your home. 

#OpenHouse #ColdwellBanker #HouseRocks #GerardiGroup #HomesForSale #Stage2Sell #SamGerardi #Realtor #HowellRealEstate #LivingstonMI

More Info: Staging To Sell

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7 Reasons To List During The Holidays

Every year at this time there are many homeowners who decide to wait until after the holidays to list their homes for the first time, while others who already have their homes on the market decide to take them off until after the holidays.

Seven GREAT Reasons Not To Wait:

  1. Relocation buyers are out there. Many companies are still hiring throughout the holidays and need their new employees in their new positions as soon as possible.
  2. Purchasers who are looking for homes during the holidays are serious buyers and are ready to buy now.
  3. You can restrict the showings on your home to the times you want it shown. You will remain in control.
  4. Homes show better when decorated for the holidays.
  5. There is minimal competition for you as a seller right now. Inventory of homes for sale traditionally slows in the late fall, early winter.
    Listing inventory as compared to the same time last year:Housing Supply Nov 2018
  6. The desire to own a home doesn’t stop when the holidays come. Buyers who were unable to find their dream homes during the busy spring and summer months are still searching!
  7. The supply of listings increases substantially after the holidays. Also, in many parts of the country, New Construction will continue to surge and reach new heights which will lessen the demand for your house in 2019.

 Bottom Line
Waiting until after the holidays to sell your home probably doesn’t make sense.

Keeping Current Matters!

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