If your real estate client has a home that is slow to sell, or has significant issues with appeal, recommending a remodel may be a good idea. Then again, you may have a client with a perfectly sellable home, who has ideas that a remodel will significantly increase the ask price – and may end up having to disabuse them of the notion.
Sometimes one specific area of the home is a bit of an eyesore, and a quick remodel can significantly improve the value of the entire house. While a remodel will rarely add more than the cost of investment to the home, it can increase the chances of a fast sale for asking price. The top five areas where a remodel does the most good and has a chance of a positive financial impact are:
- The front door. Startlingly, this can be as simple as replacing an existing door with a new, attractive, and security conscious model, preferably with a high quality screen door that has a slow close hydraulic function. In rare cases, simply a new paint job on the front door combined with updating the front steps area can have the same beneficial effect.
- The kitchen. Still the biggest game changer, an updated, sleek looking kitchen with space used sensibly and an eye to making the space look bigger even if there is limited square footage, can significantly increase the chances of a quick sale. 32% of home-buyers say they “fell in love with the kitchen” when asked to list reasons that they bought the first home they looked at, and typically a kitchen remodel can recoup up to 92% of the outlay in a fast sale.
- The bathroom. Nothing kills a sale like a cramped, outdated bathroom, a greater than 2-1 bedroom/bathroom ratio, or a half bath where a full bath should be. Updating a bathroom to meet modern standards can increase the chances of selling your home without significant outlay – in fact, bathrooms are right under kitchens when it comes to the percentage of outlay that can be recouped by the sale, with 88% being the average.
- Converting an attic or basement space into an extra bedroom is the third most lucrative remodel, with 84% of the amount spent being returned in the sale. These spaces allow for whimsy, as well, and can pull in a buyer with a child or teen as well as older couples looking for a home with a convertible sewing/craft/workout room/home office.
- Finally, replacing large windows with French doors leading to an outside deck is a great way to add openness and space to a small home and gives a feeling of luxury.
There are home remodels that turn into giant money pits, however, and homeowners should be dissuaded from sinking more money into a remodel if they can reasonably hope to recoup less than 70% of it. Such extravagant remodels include:
- Swimming pools. This narrows your seller’s field due to the fact that a swimming pool is not always a pro and may even be a con to some buyers who are concerned about upkeep or safety.
- Kids’ spaces. While a family with just the right age and gender of child may love the fairy tale mural and built in loft with a castle facade, more will be turned off by it no matter how much your homeowner loves the idea.
- Wine rooms. Unless your seller has a mansion in Bel Aire or a similar area, the odds of a buyer having a wine collection to store is slim.
- Destruction of features like fireplaces. Your seller may have never used it and see it as wasted space, but a new buyer might see it as a huge reason to buy a house.
- Moving walls. Unless you are turning a master bedroom into a suite, this is almost always a high dollar project with low return. Remind your seller to avoid massive projects and focus on smaller projects with a higher rate of return.
Knowing your current market and the kind of families who are buying in the area will help you guide your seller in how much to spend on a remodel, and where!