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Old 01-19-2014, 10:59 AM   #41
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To the OP: All real estate is local, or so the saying goes. So, I would ask these questions of the real estate agent that you plan to use when the time comes. He/she should be glad to give you some answers that apply in your local area.

He/she knows better than we do what will make the house easiest to sell and what renovations pay off and don't pay off. They get questions like this all the time. In 2010 my realtor told me that neutral earth tones work best for the paint color here, for example, and looked at a few paint colors with me. He also told me to replace all the flooring. He didn't think any other renovations would pay off. We discussed staging too, of course.
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Old 01-19-2014, 11:11 AM   #42
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Originally Posted by meierlde View Post
You take less money and sell to a flipper such as the various ugly homes folks, who do the fixup. So you get less for the house, but they expect the unexpected and pay accordingly.
I've never personally had a quote from the "Ugly Homes" people, but my father did contact them to help my sister sell her house - it was approximately $420k market value, built circa mid 70s, needing a little updating, but structurally sound and a decent floorplan. Realistic price would be perhaps $400k with spending about $30k-$50k to update it nicely.

The "ugly homes" people quoted them about $225k to take it off my sister's hands.

They aren't in the business to pay 80% of the market value pre-remodeling, put 15%-20% into the house to remodel it, and then hope to make 5% on the house, since there's too much risk, and they don't seem to do the work themselves (hiring contractors vs doing much yourself is a HUGE difference in expenses).

So bottom line - don't expect to sell it quick to an Ugly Homes person and expect to walk away with roughly the same net selling price as if you put it up for sale with a generous allowance for the average home buyer.
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Old 01-19-2014, 11:25 AM   #43
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The problem I have is the houses around us that are not on the river (there are only three on the river) are much smaller and some are not in great condition. Thus I could turn this into a million dollar home but it will still sell like a house in a $200,000 neighborhood (and we paid $300,000 and have done *some* improvements like a 40 foot x 12 foot deck).

I think of the OP's problem and see the same considerations, with the addition that we have some more significant expenditures. It is almost as much a gamble as buying an individual stock.
We have the same problem . Our small neighborhood has houses from $950,000 to a small tear down . Luckily all but one of the houses are well maintained but because each house is different it is hard to pin down a value .We have already remodeled the kitchen,replaced most light fixtures ,landscaping, new carpeting and redid the sea wall .
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Old 01-19-2014, 01:14 PM   #44
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I've never personally had a quote from the "Ugly Homes" people, but my father did contact them to help my sister sell her house - it was approximately $420k market value, built circa mid 70s, needing a little updating, but structurally sound and a decent floorplan. Realistic price would be perhaps $400k with spending about $30k-$50k to update it nicely.

The "ugly homes" people quoted them about $225k to take it off my sister's hands.

They aren't in the business to pay 80% of the market value pre-remodeling, put 15%-20% into the house to remodel it, and then hope to make 5% on the house, since there's too much risk, and they don't seem to do the work themselves (hiring contractors vs doing much yourself is a HUGE difference in expenses).

So bottom line - don't expect to sell it quick to an Ugly Homes person and expect to walk away with roughly the same net selling price as if you put it up for sale with a generous allowance for the average home buyer.
If you watch the shows the flippers like to have a 20% margin after fixup and the initial purchase price. Of course that does not include interest if the fixup takes longer than planned. To get an idea of the margins involved you can watch a few of the shows and see what their budgets look like.
Here is a link to an article, Flipping Houses it shows an 80k gross margin on a house that sells for 500k that was purchased for 350k with 70 k of fix up.
In addition there is the 10% round trip real estate private transfer tax for all the fees involved.
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Old 01-19-2014, 03:22 PM   #45
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Stagers vary in how they charge. We spent about $2500 on the stager. They did more than the usual staging stuff in that we were doing some work on the house getting ready to sell. DH and I were both working full-time then so the stagers helped us find contractors, met with contractors and did shopping for us for things for the house.

Anyway, their staging fee included bringing temporary furniture where needed with no additional rental cost. For example, we had a vacant bedroom and they brought in furniture for it.



We did this for two houses that we sold. In both cases it was very inexpensive to do and immensely improved how the house looked. Only in the most high end houses will this not be sufficient.
Or you could read "Staging for Dummies", which I did recently. I'm a DYI person so this worked fine for me. Book give tips for working with stagers, including getting the best price, so it might be helpful in any case. Also, there is a big difference in remodeling and staging, which the book covers. Staging is an investment whose return should be exceeded by a greater selling price than achieved otherwise.
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Old 01-19-2014, 03:30 PM   #46
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This is an excellent thread, with lots of experienced people posting.

I hope to die in situ, so with luck I will not have to make these decisions myself.

One thing for sure, so much depends on the market where you are trying to buy or sell. Someone mentioned all the things that would ordinarily be expected in a $200K house, and I found it funny since in urban Seattle you would be expecting a lot to even expect 4 walls at that price.

Ha
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Old 01-19-2014, 04:07 PM   #47
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This is an excellent thread, with lots of experienced people posting. I hope to die in situ, so with luck I will not have to make these decisions myself. One thing for sure, so much depends on the market where you are trying to buy or sell. Someone mentioned all the things that would ordinarily be expected in a $200K house, and I found it funny since in urban Seattle you would be expecting a lot to even expect 4 walls at that price. Ha
Would you get a roof with the walls too? You are certainly correct about the market. Where I live in smaller town fly over country, my $150,000 house is easily top 10% in value. 200k would be top 3% without question. If someone built a new 500k home here, which would probably buy a shack in some coastal areas, we would all pay $10 bucks to tour the place.
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Old 01-19-2014, 08:42 PM   #48
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I agree with Kat - most buyers have no imagination and don't want an allowance. I would replace the carpeting with good quality laminate flooring if it is appropriate for the style/level of house you have. I think most of today;s buyer's will prefer laminate to carpet. If your house is a higher end house, then hardwood rather than laminate.

Also, fix the rotting stairs. For the double panes that have lost their seal, you may be able to replace the window and frame rather than the whole window, maybe not for a 20 year old window. Also, repair and repaint the drywall.

Also, do it now so you can enjoy it in the interim and it won't look like you did it just because you were selling.

I don't think getting an inspection is a good idea, only because if they tell you something bad and expensive that you don't want to address you would be required to disclose it to the buyer. You're better off not knowing.
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Old 01-20-2014, 01:47 PM   #49
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It is interesting thread and my gut level is to agree with the OP. On the other hand, one of the things I've learned in my not very long rental real estate career, is my gut is pretty awful for real estate. Katmeow has given as a good explanation as I've heard of when it makes sense to remodel.

I am one of the those buyers without much imagination. When I was shopping for real estate in Vegas, I relied on my excellent real estate agent to explain if you spend X dollar to fix it up you can rent it. Her cost estimates where pretty close (even if she was too optimistic on the rental prices). Still there were many properties we looked at where, the amount of repairs was just too much work. The place looked like crap (many foreclosed properties are horribly damaged) and I just couldn't get past the initial impression. In a few cases I am sure my Realtor was right, I would have been better off buying the place and fixing it up than looking for a turnkey rental.

My story with allowances is the house I sold in Silicon Valley in 99. It was one of the largest houses in the neighborhood, so I was hesitant/too lazy to spend a lot of money fixing it up. When I bought the house the small pool needed re-plastering. 15 years of my poor maintenance didn't nothing to improve its appearance. I got a quote a filling in the pool was almost the same price as fixing it. For me even though I really wanted a pool when I bought it, I would have leaped at the opportunity to fill the damn thing in. So when my house didn't sell I lowered the price and offered an allowance.

The buyer was like myself, single and Silicon Valley engineer type. He certainly was no serious swimmer and not even sure if he I saw sunlight. I told the guy you'd be a lot better to fill it in.

Not only did he not want the allowance but they insisted that I fix the pool before buying so I did. I am not 100% sure but my guess is that if I had either fixed the pool or filled it in the house would have sold faster and possibly for more money.
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Old 01-20-2014, 02:15 PM   #50
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I'm a little late to the thread but as a full-time Realtor I thought I'd throw in my opinion.

- Don't do an inspection ahead of time as some have suggested. Why? Because if you find anything now you are required by law (at least in MN) to disclose any material facts to a buyer. If the buyer does an inspection and finds mechanical or structural issues deal with them at that time. Almost every buyer is going to pay for their own inspection (and not rely on yours) so they could easily find different issues they care about or maybe wouldn't have cared about the ones you addressed.

- Do pay for a professional home stager. As others have said, buyers want a move in ready house - not allowances. One of the primary things you can do to affect value is have a home that shows well. As a listing agent I pay a professional home stager to go into any of my sellers home before we list them. They spend 60-90 minutes going through every room (and outside) to make suggestions for making the home appeal to today's buyers. They then send out a detailed list to follow. I've had many sellers spend days or weeks to tackle these projects and it almost always results in a faster sale. I pay my stager $125 for this consultation. I'm sure you could find someone to do the same and just pay them directly if you don't want to engage a Realtor yet.

- Buyers pay for stuff they can see. In my experience your new roof and new A/C will add almost $0 extra the sale price. Buyer's expect a roof to keep out the weather and an A/C to cool and otherwise don't care. Kitchen's and baths are the most important but decent flooring is important too. It doesn't cost that much to put in laminate flooring or mid range carpet. My painter can do an entire house for $1,000 - 1,500 inc. paint. Those pay off in having the appearance that will appeal (and don't paint it white!).

Good luck!
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Old 01-26-2014, 01:23 PM   #51
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We're in the middle of prepping our house for sale and we've interviewed several real estate agents. All of them recommend having a home inspection first. Two main reasons: (1) to ensure a smoother close processes so that nothing comes up unexpected when the buyer is able to walk due to contingencies, (2) if you get multiple offers, once you've selected a winner you may have less leverage if they want to negotiate the price downward.

I'm not sure how much of this is due to our area (san jose). But you definitely even hear of sales where people make offers without inspection contingencies (presumably they rely on the homeowner's inspection). Currently months of inventory is less than 1. I'm told normal inventory is 6 months.

Also a big thank you to katsmeow for her very informative post at the beginning of the thread.
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Old 01-26-2014, 08:27 PM   #52
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So some random thoughts:

1. Buyers as a group have no imagination. Not only can they not imagine a house with a new carpet, they can't imagine a room painted a different color and so on.... .
Should have replaced that carpet! Would a could a should a...

Good post.
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Old 01-26-2014, 08:42 PM   #53
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Apparently wood-look laminate flooring is becoming more and more acceptable, at least in my area. It is by no means a fancy 'hood. Houses are 50+ years old. SF East Bay area.

I visited an open house today near my home. It is listed at 769k and it had laminate throughout except for tile in the entry and baths.

They also put nice granite and cabinets in the small kitchen, stainless, and had crown moulding and neutral paint. The bathrooms were updated but not to the same level. More easily identifiable basic Home Depot stuff.

They also changed the front elevation and re-stuccoed.

I was surprised to see, though, a very battered and stained garage door and dirt lots in front and back. NO landscaping, just a few potted plants set around. Maybe they do not expect people to look at the outside.

Weird -- it was flipped and I guess to make their profit, putting in sod or shrubs would have blown their budget.

I find it hard to believe anyone would pay that much for a house in this neighborhood. And no hardwood!

;-)
We'll see.
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