Should I Upgrade My House?
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Should I Upgrade My House?
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If you're considering the sale of your home by owner, you may be wondering if you should spend money upgrading it. Many in the field will tell you that in order to get a quick sale for top dollar, your home must be in top condition. And that means upgrading.
There is some truth in this assessment - it only stands to reason that an upgraded home will sell for more money and quicker than a home that's seen as old-fashioned, or obsolete. The big question, however, is will you get more out than the money you put in? Indeed, will you even get out just what you put in if you upgrade? After all, it hardly makes sense to spend one dollar to get fifty cents back.
The answer is, "Maybe."
Assuming that your home is less than 20 years old, or that along the way you or a previous owner have already replaced old and outmoded appliances and fixtures, it probably doesn't make sense to upgrade right before you sell. Studies indicate that even upgrading the most important areas of the home, the kitchen and master bathroom, will typically not yield a positive return on the investment. Even in the best of circumstances getting back dollar for dollar can be difficult. Thus, in a home of $300,000, if you spend $25,000 on your kitchen, right before you put your home up for sale, you might be lucky to get a $15,000 to $20,000 bump in price. Except for possibly getting a faster sale, it hardly makes sense.
However, if your home is truly outdated with appliances from the 1950s and fixtures that are cracked or tarnished, then they will drag the price of your property down significantly. In that case upgrading can be sensible. Indeed, a $25,000 kitchen remodel, here, might yield $30,000 or more in price increase.
The one area where upgrading seems to make sense in every case, is where the change is mainly cosmetic, and the price is low. In other words, it doesn't cost a lot, and it shows well. This includes, for example, putting a new stove in the kitchen, or new light fixtures in the bathroom, or even replacing a cracked tile countertop with a new one. You could reasonably expect to recoup your money and perhaps even more, simply because you didn't spend very much, yet you made your house "show" much better. Of course, the biggest bang for your buck comes simply from repainting inside and out.
On the other side of the coin, upgrading where it doesn't show is not usually cost effective. Putting in a more powerful, new garbage disposal (when the old one still works) doesn't make a lot of sense, because no one sees it. Similarly, putting in a granite countertop, while giving the kitchen/bath an air of elegance, might cost so much, you'd find it hard to recoup the money invested.
The big difficulty, of course, is that it's hard to put an exact price tag on how much of a drag not remodeling will put on your home... and how much of a price increase upgrading will offer. This is especially so in hot markets where everything that's put up for sale seems to sell within days, if not hours!
Doing a major upgrade just before selling rarely makes sense. Unless your home is a "fixer-upper", you're unlikely to recoup your money. And because you won't be living there after the sale, you won't be able to enjoy it yourself.
is the most prolific real estate writer in America having produced over 100 published books in the field. His TIPS & TRAPS
McGraw-Hill series has sold well over a million copies and his FOR SALE BY OWNER KIT
and FIND IT, BUY IT, FIX IT
and other books have been strong sellers for Dearborn.
In addition Irwin writes a regular real estate column for The Wall Street Journal online and is introducing a new weekly column for Owners.com.
Irwin has sold his own property "by owner" and during over 30 years in the business has been a broker and consultant to lenders, agents, buyers and sellers.
He can be reached through his website RobertIrwin.com.
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