How much to prep house for sale?

[Midpack]

We opted not to have an inspection. House is in good shape, but we found out that if you have an inspection and find something unknown, then it must be disclosed.

Still, even if we don't have our own inspection so we don't have to disclose some unexpected problem, wouldn't a buyer's inspection likely show that same problem? And if it does, they would probably expect resolution, which would probably be less convenient at that time.

Most likely yes. Unless it's a tear down or the buyer is qualified to do an inspection him/herself, there's going to be a buyer's inspection in most cases, a lender will require one for sure. If there's something major wrong the buyers will want it fixed at the owners expense best case, or worst case buyers will walk after deciding 'what else is wrong that the inspection didn't find' and/or just because they don't want the hassle/uncertainty. You takes your chances...

 

[daylatedollarshort]

We did the termite inspection so far. We have some things we obviously need to address, so we wanted to hire a contractor and get everything done at once.

 

[Fermion]

What do you do if the home inspection reveals more than you want to fix? Do you really have to tear down the home?

 

[bizlady]

I was about to say "good idea" to the folks who suggested getting a preemptive inspection ourselves, though I hadn't thought about your point. Still, even if we don't have our own inspection so we don't have to disclose some unexpected problem, wouldn't a buyer's inspection likely show that same problem? And if it does, they would probably expect resolution, which would probably be less convenient at that time.

Laws might vary by state. Certainly anything major I would think would be found by a competent inspector. But in our area, only about half ask for home inspections, and I suppose to some degree, it depends on the inspector. SO we figured why deal with it now if we do not have to.

We had a small well years ago for watering the lawn, which had long ago dried up. We reviewed disclosure forms and laws 6 months ago, and found that wells have to be disclosed and capped- and that filed with the state. So we took care of that this fall. Bottom line, prepare for the controllable.

 

[Katsmeow]

I was about to say "good idea" to the folks who suggested getting a preemptive inspection ourselves, though I hadn't thought about your point. Still, even if we don't have our own inspection so we don't have to disclose some unexpected problem, wouldn't a buyer's inspection likely show that same problem? And if it does, they would probably expect resolution, which would probably be less convenient at that time.

Maybe the buyer's inspection would show the same problem and maybe it wouldn't. Here is what I worry about. Whenever I have bought a house the inspection has almost invariably gone this way. The inspector inspects (I always attend) and he points out various things. But, usually he says that these aren't that bad and orally tends to minimize things (this was true, even with the house that in retrospect we shouldn't have bought because it needed too much work). So, as a buyer I pretty much end the day thinking some things need to be repaired but nothing is a deal breaker. Then the inspector sends me the report. Invariably, the written report is written in all CYA. Every house I've ever bought sounds absolutely terrible from the written report. No inspector wants to be held liable for having missed something. So, the report always has all kinds of things listed, most of which sound awful, but are really not all the bad. There is usually no context in the report. In the oral report to me, the inspector might have said that Problem X is very common and is in almost all houses and would cost $15 to fix. The written report leaves all that out and makes Problem X sound horrendous.

So. The problem with just giving the inspection report to the buyer is that the buyer gets the very overblown CYA report with none of the context. Unless the buyer is a very experienced buyer there is a good chance the buyer gets scared off at that point.

And, frankly, I don't really want the buyer relying on my inspection report. What if my inspector missed something? I want the buyer to get his/her own report.

 

[BigNick]

I find it very strange that people feel the need to spend lots of money on new appliances, granite counter tops, etc, basically to gift them to other people, who might not have chosen those items anyway. I'm not criticising the people who do this; it's more that I find it sad that buyers are so dumb.

When we sold our house 6-7 years ago, people were openly complaining about this or that feature as the agent showed them around (in our presence). Yet the majority of the complaints were about things like colour (and we didn't have a garish colour scheme). Apparently we were meant to have psychically determined the exact carpet, wallpaper, etc, that Mr and Mrs Wonderful would like. (When we'd bought the house, all the carpets smelled of dogs, but it cost us peanuts and a couple of days to change the carpets. People have no imagination, it seems.)

We had friends who bought a house, spent a lot of time any money upgrading it (mostly for themselves), and then moved 3 years later for unavoidable professional reasons. They had spent tens of thousands on remodelling the kitchen and bathroom with top-of-the-line appliances and fittings. The new buyers tore those out and replaced them with their own, marginally different choice of top-of-the-line appliances and fittings. What a waste.

 

[travelover]

I find it very strange that people feel the need to spend lots of money on new appliances, granite counter tops, etc, basically to gift them to other people, who might not have chosen those items anyway. I'm not criticizing the people who do this; it's more that I find it sad that buyers are so dumb...........

I totally agree, but it seems to be human nature. I wouldn't want to be around when my house is shown.

 

[Fermion]

Our house needs some remodeling that I am not willing to do, but I hope to keep everyone in the backyard for most of the time

 

[Midpack]

I find it very strange that people feel the need to spend lots of money on new appliances, granite counter tops, etc, basically to gift them to other people, who might not have chosen those items anyway. I'm not criticising the people who do this; it's more that I find it sad that buyers are so dumb.

When we sold our house 6-7 years ago, people were openly complaining about this or that feature as the agent showed them around (in our presence). Yet the majority of the complaints were about things like colour (and we didn't have a garish colour scheme). Apparently we were meant to have psychically determined the exact carpet, wallpaper, etc, that Mr and Mrs Wonderful would like. (When we'd bought the house, all the carpets smelled of dogs, but it cost us peanuts and a couple of days to change the carpets. People have no imagination, it seems.)

We had friends who bought a house, spent a lot of time any money upgrading it (mostly for themselves), and then moved 3 years later for unavoidable professional reasons. They had spent tens of thousands on remodelling the kitchen and bathroom with top-of-the-line appliances and fittings. The new buyers tore those out and replaced them with their own, marginally different choice of top-of-the-line appliances and fittings. What a waste.

You do take a chance in remodeling before selling and there is no way you can make all the "right choices," but it should be a different mindset than remodeling for yourself where you might spend more then appropriate or choose colors/finishes that most buyers wouldn't go for. With the former, you make sure you choose popular finishes, versatile/neutral colors, above builders grade (most neighborhoods) but not extravagant - no different than a builder does with a spec home.

And hopefully it's not out and out gifting. We just redid our kitchen, making choices putting resale ahead of our wants, but we'll enjoy it for 2-4 years. I would have a hard time doing a major reno just to resell, though flippers do it all the time. Flippers of course pay bottom dollar for houses so they can turn a profit, maybe that's instructive in the context of this thread...

Sellers will always sentimentally overvalue their property, and buyers will always expect the perfect house under budget. That'll never change.

 

[MooreBonds]

Our house needs some remodeling that I am not willing to do, but I hope to keep everyone in the backyard for most of the time

Wow - quite a selling point! Have you already put in an outdoor seasonal BBQ/kitchen area, fire pit, and patio?

 

[Bestwifeever]

Our house needs some remodeling that I am not willing to do, but I hope to keep everyone in the backyard for most of the time

That is a beautiful backyard but will some buyers think about flooding, danger to small children, etc.? Just to show there is always something someone will pick up on.

I think buyers dismiss some things just for negotiation purposes or to whittle their choices down. They also have their own stuff to coordinate with--my neutral paint might be a touch too brownish. And their own tastes, of course, which will no doubt not match ours. It is hard to live our lives in terms of resale.

If I were the OP, I would fix the windows and the drywall cracks and the rotting wood steps from the basement and replace the stained carpet, and don't worry about the rest. It is a 20 year old house and those are maintenance things, not resale fix ups.

 

[Moemg]

I also have a great backyard but I am still going to do some remodeling to get the house ready .Update the master bathroom , new carpeting , new paint ,decluttering , redo a few areas of the hardwood and a new ceiling fan in the master bedroom . Here is a picture of my backyard .

 

[Fermion]

Moemg I will trade you! I would love to live on the ocean.

Our river is only good for salmon/steelhead fishing and whitewater rafting/kayaking.

Your backyard I can use my sailboat!

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.

 

[meierlde]

What do you do if the home inspection reveals more than you want to fix? Do you really have to tear down the home?

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.

 

[Fermion]

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.

Ok, that is what I thought. That sounds like what we will do if the house gets no bites in 6 months or so. Drop the price to an amount that the flippers will bite.

I can take the $100,000 we don't spend and invest it in Apple. Instead of paying $15,000 to $20,000 in sales taxes, extra commissions, excise tax, and lost opportunity cost, I will get a 2.4% dividend.

 

[W2R]

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.

 

[MooreBonds]

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.

 

[Moemg]

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 .

 

[meierlde]

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.

 

[Options]

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.

 

[haha]

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

 

[Mulligan]

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.

 

[pb4uski]

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.

 

[clifp]

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.

 

[Fishingmn]

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!