Sellers, consider the resale when building or remodeling!
I have viewed hundreds of homes now in the Montrose area of Colorado, between the weekly broker tours, showing various homes to buyers, visiting the homes of potential sellers, and, of course, the homes of neighbors and friends. One issue that regulalry arises is the homeowner who has overbuilt or over-remodeled, which makes us think (or say out loud to each other), “What were they thinking?!”
Many of these situations happen because the homeowners had no thought of selling anytime soon, if ever. The house they built or the remodeling they did was for their own use and enjoyment, consistent with their personal tastes and preferences. Unfortunately, things can suddenly change for a homeowner, such as divorce, death, job transfer, job loss, and in recent years, a terrible downturn in the economy and real estate market which has resulted in the wiping out of much if not all of the equity gained over several years of ownership.
Whether you intend to live in your home indefinitely or are looking to spruce it up to sell, it is very important to keep in mind the resale value of your home when you buy or build it and the cost-to-value of any remodeling project, because, well, you just never know. I realize that certain trends change over the years and that it may be difficult to predict what will be fashionable in 10-20 years or more. But some things or features will always be important or desireable, e.g., location, orientation, energy effeciency, square footage, room size, number of bedrooms, existence of garage or storage. I would say that as a general rule, the more “mainstream” for the time you can be (or become at time of sale), the easier it will be for you to sell and the higher price you can expect to get. Don’t make the mistakes of these real cases I’ve seen:
- The 3,000 square-foot, 5 bedroom, 4 bath custom-built home that cannot be sold for even the cost to build because it was overbuilt for the neighborhood, which is mostly made up of 3 bedroom, 2 bath, 1500 square-foot homes.
- A huge home with small bedrooms, including a skimpy master suite, not to scale with the overall square footage of the home.
- A gorgeous, new custom home built next to a transfer station, a landfill, or a scruffy, 5-acre parcel with an old singlewide on it.
- The beautiful, rambling custom ranch home with expansive views to the southern mountains, but which also overlooks the feedlot down below.
- A horse property, complete with barn, pasture, arenas, fencing, irrigation water, in a very desirable location with a darling, 2200 square-foot custom home with upscale, artistic finishes, impressive great room, spacious, state-of-the-art kitchen, inside art studio, and five-piece master suite, but which suite was the only bedroom (this property eventually sold, but finding a lender to loan on a one-bedroom home was very problematical).
- A unique, well-built, energy-efficient home appropriate for the neighborhood or area, but with a supersized workshop or accessory building that cost almost as much as the house to build and is the focal point, for which the average buyer is unwilling to pay the premium.
- A multi-level modern, custom home with trendy finishes and bright, wild paint, with colored cement flooring and stainless steel staircase and railings, nautical port-hole windows, and other such “unique” touches, nestled among the beautiful Ponderosa trees on a mountaintop where one would expect to see a log home (and where other log and timber homes are seen).
- The older, Craftsman home in town that has been freshly painted inside and out, with remodeled kitchen and bathrooms with high-end cabinetry, hardware, plumbing fixtures, tiling, granite countertops, but the foundation still slants and ondulates wildly.
- A remodel that turns the 2-car garage into a family room that still looks like the former garage and now leaves the property with no garage or room to build another one.
- A half million-dollar, brand new, beautiful spec home in an established neighborhood or subdivision, with absolutely no landscaping, fencing, on a bare adobe dirt lot.
- An elegant, 3-story, 4,000 square-foot home, with high-end interior finishes and amenities, including gourmet kitchen, butler station, central vac, sound system, game room, library, and much more, but with white vinyl siding on the exterior.
- An older home in a very desireable, rural subdivision, all on 2-acre+ lots, which, unlike other homes in the area, has not been updated since it was built 30 years ago, with original blue, formica kitchen countertops, blue shag carpet, old-fashioned wall paper, dark walnut cabinets, doors, and trim, old harvest gold appliances and electric stove-top, popcorn ceilings, . . . and no one is buying the “retro” pitch.
- A darling, remodeled, upgraded Victorian home in town, but with overgrown trees and shrubs swallowing up the house, cracked, crumbling, and slanted cement or stone walkways, old, dilapidated backyard fence, and front picket fence in serious need of repainting, with a detached one-car garage, the former “coach house” of an eyesore.
The list, of course, could go on and on. In all these cases, the homes sat on the market for quite some time before they eventually sold for considerably less than their original asking price or well below market. Some are still for sale, some never did sale, and others went into foreclsoure.
In sum, homeowners and sellers, do give some serious thought to the cost-to-value and resale value of any purchase, construction or remodeling. It is especially imperative in this real estate market that is very competitive and when home values are flat to falling. The days of the easy fix and flip are gone. As far as what can and should be done to get the best value for your investment, here are some good, recent articles I found on the internet:
2009 Cost vs. Value Report: Small Projects, Big Bang
Homeowners–Exterior Remodeling Projects Prove Best Bang for Your Buck
Top 10 Must-Have Features in Today’s Homes
And when the market improves, home values once again soar, fixing and flipping is feasible, and demand outstrips supply, these cost-to-value and resale considerations should still be made.
~Ninah
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