Advice For Selling Home

[rodi]

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Originally Posted by urn2bfree One thing I don't get. Most experts say you do not recoup the cost of most renovations, with kitchen and bath getting a higher percentage recoup but not over 100% recoup. Given that any increase in the sales price is also just more money for the realtor, aren't the realtors operating with an inherent conflict of interest? Why not tell the home seller to spend their money in hopes of making more? Whether the home seller recoups their investment in those upgrades or not, any increase in sales price goes to the realtor! Sent from my iPad using Early Retirement Forum

I don't think it's so much the realtor wanting a bigger commission (although there is some motivation there)... They are looking for a quick sale with minimum effort. And your spending gets them that.

The pet peeve I have is seller give backs towards closing costs - that inflates the price (and commission.) Depending on your market it can also increase your transfer taxes, property taxes, etc...

But not only do many buyers not have a down payment (more than the 3-5% FHA) and closing costs... they want an HGTV stainless/granite/shiny pretty modern home.

At the risk of sounding like an old grandma.... 'back in the day' when I bought my first home.... you needed 20% down plus closing costs... and the income verification was stricter. Most young people rented for longer before buying a home in order to save the 20-25% needed to close on a home.... and then bought a fixer and added value via sweat equity.

[athena53]

Yeah, I'm a grandma, too, but don't like to think of myself as old! I don't have a problem with borrowing 95% if the rest of your finances are sound- I did that in a very expensive market (NNJ) years ago, and the buyer of our last house put only 5% down.

I was surprised, though, at the lack of interest in the overall structure of the house, energy-efficient features, etc. It was all about superficial things that could be changed over time.

[Car-Guy]

The last home I sold was in 40+ year old neighborhood. We spent about 10k fixing it up, painting the inside, minor repairs, etc and listed it. The real estate agent I used "suggested" we could get more if we updated the house. Of course their commission would be greater too. It appraised "as is" about what other homes in the area were going for so we listed it at a slight premium. It sold in a few months for almost exactly what it appraised for which was what the average homes in the area were selling for. I seriously doubt if I would have put another 25k in it that it would have sold for 25k more than I got.

[W2R]

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Originally Posted by Car-Guy The last home I sold was in 40+ year old neighborhood. We spent about 10k fixing it up, painting the inside, minor repairs, etc and listed it. The real estate agent I used "suggested" we could get more if we updated the house. Of course their commission would be greater too. It appraised "as is" about what other homes in the area were going for so we listed it at a slight premium. It sold in a few months for almost exactly what it appraised for which was what the average homes in the area were selling for. I seriously doubt if I would have put another 25k in it that it would have sold for 25k more than I got.

Last summer, I sold my 1972 home at a price supported by comps after only 4 days. This was after no repairs/renovations/fix-up, following the suggestion of my realtor, although I thought it needed repairs. I insisted on having it professionally cleaned but did nothing else since that was his advice. It was completely empty and unstaged. My realtor said the paint and carpet still looked new.... really? It was 4 years old and didn't look new to me, but whatever. It seems to me that the reasons why it sold so fast were (1) good market locally, and (2) blind luck.

[pb4uski]

Quote:

Originally Posted by urn2bfree One thing I don't get. Most experts say you do not recoup the cost of most renovations, with kitchen and bath getting a higher percentage recoup but not over 100% recoup. Given that any increase in the sales price is also just more money for the realtor, aren't the realtors operating with an inherent conflict of interest? Why not tell the home seller to spend their money in hopes of making more? Whether the home seller recoups their investment in those upgrades or not, any increase in sales price goes to the realtor! Sent from my iPad using Early Retirement Forum

The thing is that you don't recoup the cost of these refreshes and only 6% or less of the price improvement goes to the realtor but... the house sells quicker since it is more move-in-ready so that is months less that the owner is paying property taxes, power, heat, maintenance, etc.

[Cobra9777]

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Originally Posted by H2ODude I think it is very dependent on the market and what you're competing with. As pb4uski did, pricing the update in can be a good strategy, but a lot of folks can't see beyond that. I too would prefer to fix up a purchase to my taste, but DW is one who can be turned off by a dated home. Taking all this into consideration, we're of a mind to do the updating now and enjoy it rather than do it in prep for sale. We have no idea when we'd move out of here, but figure the bath updates are good for 10-15 years and the kitchen we did in 02 still looks great. Just don't want to be doing updates that we wouldn't get to enjoy!

That's our thinking exactly. We will downsize at some point, but not sure if it will be 3 years from now or 15. There are some obvious updates that need to be made. So we will do the updates now, enjoy them for several years, and hopefully get some value when we eventually sell.

Ours is a very large house in a neighborhood with custom-designed homes on 2-3 acres, built in the late 1960s. It's a unique kind of place where buyers don't really expect it to be move-in ready. Almost everyone who buys in this neighborhood spends several months having the house remodeled to some degree before they move in. So yes... very dependent on the market and situation.

[timo2]

In my area, prospective buyers all want the sewer pipe inspected via a camera

[W2R]

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Originally Posted by timo2 In my area, prospective buyers all want the sewer pipe inspected via a camera

That's a standard inspection done here, to, but by the buyers as part of their inspections. Then if there is trouble, the sellers are expected to repair it as part of the repair list.

[Moemg]

The problem with remodeling to sell is everyone has different taste . I have been looking for a new house for about four months and I have seen so many bad kitchen re do's . They are nice kitchens just too modern for my taste .One kitchen was all industrial gray . The biggest mistake of all is putting granite counter tops on outdated cabinets.

[iac1003]

White is the new appliance color so buy a new stove/oven combination in your original color.

Our house went on the market 10/1. Many showings, all the feedback was good, we had an offer the 2nd week but the contract fell through due to some financial issues. We took it off the market the week before Thanksgiving. But a couple who saw it at an open house came back last week and again this week and now we are at contract again with an all-cash buyer.

We bought our house 6 years ago and renovated the kitchen and 2 of the 2 1/2 baths, enclosed our back deck to be a screened-in porch, redid electrical, some plumbing, had custom cabinets built, renovated our shed into a workshop/woodshop with a new electrical panel, AC and heat, etc. For this sale I turned the 3rd bedroom back into a real bedroom (have an aerobed on there), removed almost all our artwork, put the leaf in the dining room table to show how large a space it is, we repainted the house that ugly gray everyone likes so much, put everything away. We also went through every item on our previous inspection and fixed everything that we did not do upon buying. Our inspection yesterday passed with flying colors.

I think HGTV has given buyers and realtors unreasonable expectations. The shows are all rigged, so that's what makes it worse to me. Because we did not have the most up-to-date backsplash color and bathroom finishes one realtor told us our house wouldn't sell except for a very low price. We already put $50K into the house, I wasn't going to tear out tile for the latest fad which would be dated in 5 years. I also did a lot of yardwork outside, keeping the front plantings looking very nice and remulching our side yards.

Good luck!


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[karen1972]

Its not just HGTV, but that every person on TV lives in some crazy fancy over the top house. However, reality is most people don't actually know the difference, its really about getting the right "look". ie I spent $20/square for a backsplash with black onyx and quartz in it.. then bought black appliances to match the onyx and corian to match the quartz... even realtors were like.. this is corian?? yes yes it is. lets face it a nice colored laminate with details these days looks better than some of that cheap granite people have put in over the years. Honestly I've put in backsplash and changed out countertops and knobs in numerous houses and people don't even notice how ridiculously small the kitchen is or how old the cabinets are.. they just see shiny backsplash... same reason why I covered my basement (1000SQFT) in 99 cent laminate.. and all I ever got was compliments about how awesome the basement was.. it was too nice for a basement.

The trick to selling houses these days is assume everyone has ADD and put out some shiny... its sad but true. There are so few people that know or want to know the details of the home... I went to a new construction where they had two builders.. it was crazy how cheap the second builder was getting away with and people were paying the same price.. cheaper, less detail in the molding, got rid of spray foam and went back to the old kind. hardwood flooring went from engineered flooring to laminate. I'm like so I should pay the same price and get poorer materials and workmanship but I'm pretty sure I'm the only one who noticed the two "identical" units for sale were not at all identical.

[athena53]

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Originally Posted by karen1972 The trick to selling houses these days is assume everyone has ADD and put out some shiny... it's sad but true. There are so few people that know or want to know the details of the home... I went to a new construction where they had two builders.. it was crazy how cheap the second builder was getting away with and people were paying the same price.. cheaper, less detail in the molding, got rid of spray foam and went back to the old kind. hardwood flooring went from engineered flooring to laminate. I'm like so I should pay the same price and get poorer materials and workmanship but I'm pretty sure I'm the only one who noticed the two "identical" units for sale were not at all identical.

LOL- I agree on the "shiny"! DH and I looked at some new construction, out in the middle of nowhere (likely former farmland, so no trees, either). One house had a glamorous kitchen with granite countertops, but the tub/shower was one of those nasty pre-fab enclosures. It was high-priced for the area, too. Not interested.

[45th Birthday]

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Originally Posted by timo2 In my area, prospective buyers all want the sewer pipe inspected via a camera

Around here, that's only done when you turn 50 and then every 10 or maybe 5 years. Oh, wait, I'm thinking of something else...

[urn2bfree]

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Originally Posted by Souschef I am sorry, but the realtor's commission is usually 6%, so he would only get 6% of the increase. When I sold my house, there were 2 offers, and one buyer raised his offering price by $5000. The realtor got $300 of it, and I got the other $4700

But if the upgrades you had to make to get the buyer to pay $5000 more cost you $6000 ( and most renovations do not pay off at 85%) then the realtor got $300 more and you have $1300 less. If you paid less than $5000 to get the buyer to want to pay more, then the realtor still gets $300 more out of it and you get $4700 minus the cost of upgrades....see, no matter what the realtor gets the whole benefit no matter what happens to you...you take the risk, they reap the same rewards either way.


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[Souschef]

Quote:

Originally Posted by urn2bfree But if the upgrades you had to make to get the buyer to pay $5000 more cost you $6000 ( and most renovations do not pay off at 85%) then the realtor got $300 more and you have $1300 less. If you paid less than $5000 to get the buyer to want to pay more, then the realtor still gets $300 more out of it and you get $4700 minus the cost of upgrades....see, no matter what the realtor gets the whole benefit no matter what happens to you...you take the risk, they reap the same rewards either way. Sent from my iPad using Early Retirement Forum

You would be correct if I had to upgrade, but this was an "auction" situation where 2 buyers wanted the property and one upped the offer by $5000. I had to do no addition work for the $5000

[athena53]

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Originally Posted by timo2 In my area, prospective buyers all want the sewer pipe inspected via a camera

DH and I had a bit of bad luck in that area just before we put the house on the market. The drain in the basement by the furnace had a bad smell. DH thought it might be a dead mouse and poured in some fluid meant to get rid of some of the rot and the smell. It wouldn't go down the drain. We called the plumber, who couldn't snake it out and brought in a jackhammer. $3,000 later it was cleared and snaked out to the street.

With the prospective buyers we had, the $3,000 would have been better spent on a new backsplash in the kitchen.

[urn2bfree]

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Originally Posted by urn2bfree But if the upgrades you had to make to get the buyer to pay $5000 more cost you $6000 ( and most renovations do not pay off at 85%) then the realtor got $300 more and you have $1300 less. If you paid less than $5000 to get the buyer to want to pay more, then the realtor still gets $300 more out of it and you get $4700 minus the cost of upgrades....see, no matter what the realtor gets the whole benefit no matter what happens to you...you take the risk, they reap the same rewards either way. Sent from my iPad using Early Retirement Forum

Well, that's different than what my comment was about. I was pointing out that the realtor's have a perverse incentive to recommend upgrades and renovations as you pay all the expenses and they collect more based on your work, your investment.

It's just a special example of how the model of commissions on real estate is perverse in general. I find it hard to see how it takes twice as much work to sell a house valued at $600,000 vs a house valued at $300,000, but the realtor collects twice as much anyway. They collect more all because the person who worked and saved to afford the more expensive house has a more valuable asset. The higher pay is not really a result of any special effort of the realtor.


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[jfn111]

Quote:

Originally Posted by urn2bfree Well, that's different than what my comment was about. I was pointing out that the realtor's have a perverse incentive to recommend upgrades and renovations as you pay all the expenses and they collect more based on your work, your investment. It's just a special example of how the model of commissions on real estate is perverse in general. I find it hard to see how it takes twice as much work to sell a house valued at $600,000 vs a house valued at $300,000, but the realtor collects twice as much anyway. They collect more all because the person who worked and saved to afford the more expensive house has a more valuable asset. The higher pay is not really a result of any special effort of the realtor. Sent from my iPad using Early Retirement Forum

I'd agree with you if it works both ways and we can up the low end.
I recently represented one of my investors on a $30,000 fire damaged house. The amount of phone calls and chasing around for what ended up to be a $660 commission. ($30,000 * 2.75%) - (20% to the Broker).

[Meadbh]

I read somewhere that realtors selling their own houses wait longer for a good offer than their customers do, and get higher offers on comparable properties when they are their own. They have an incentive to get your house sold ASAP so they can bank the commission and move on to the next sale.

[jfn111]

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Originally Posted by Meadbh I read somewhere that realtors selling their own houses wait longer for a good offer than their customers do, and get higher offers on comparable properties when they are their own. They have an incentive to get your house sold ASAP so they can bank the commission and move on to the next sale.

Just remember that the home owner sets the price. The Realtor will suggest a price but the owner has the final say. The same goes for accepting offers. The Realtor, by law, has to submit all offers to the owner. The owner makes the final decision.