This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!
Question: I’m preparing to sell my home this year and wondering if remodeling the 1990s kitchen and bathrooms will improve the resale value and help me sell faster or if I should leave it as-is. Is there a good way to decide which option is best?
Answer: Yes, remodeling your 1990s kitchen and bathroom will improve the resale value and probably help the home sell faster, but that’s not the right question to ask. The question you need answered is what updates will create a positive Return on Investment (ROI), meaning that every dollar you spend on updates results in an increase in expected sale price of at least one dollar. For many sellers, this is the most valuable advice your real estate agent can provide.
Avoid Most Remodeling Projects
Simply put, most remodeling projects do not return a positive ROI for homeowners. A number of large companies including Zillow and Remodeling Magazine have conducted extensive studies and determined that most large-scale remodeling projects like bathrooms, kitchens, roofs, additions, etc only return about 50-80 percent of their cost on the resale market. Remodeling Magazine updates their Cost vs. Value statistics every year using regional data and has a great report specific to the DC Metro area.
No Simple Answer…
- There’s no easy answer to this question without being in the house, meeting with the owners, and knowing the local market. Here are some questions that need to be considered:
- Who is the most likely buyer? Are they likely to have cash on-hand to make updates themselves?
- Can the home be considered move-in ready in its current state?
- Is the home suffering from functional obsolescence or just requires a quick facelift?
- In as-is condition, does the home and pricing appeal to an investor?
- How has the market reacted to homes in similar as-is condition, in similar condition with minor updates, and in similar condition with major updates/remodeling?
- How much similar inventory is there (current and projected) at each level of updates (as-is, minor, major)?
- What are your (homeowner) sales priorities, timeline, and pre-sale cash on-hand?
- Is it easy for a buyer to envision an updated version of your home?
…But I’ll Try
Here are some tips and principles I find myself using most-often when advising homeowners on pre-sale updates:
- Flooring (replace/refinish), paint (walls, trim, doors), de-cluttering, and staging are affordable for most homeowners and almost always result in a positive ROI and in some cases new, matching kitchen appliances are positive ROI investments
- There are a lot of little things you can do to improve curb appeal (e.g. power washing and mulching) and interior appeal (e.g. new outlet plates and door knobs) that make a big difference
- Updates should be done in groups/tiers, not one-offs, so that your investment is coordinated and within budget. In other words, if you commit to doing one update, you need to commit to other similar updates in order to get a positive ROI. For example, it doesn’t make sense to replace flooring if you’re not committed to de-cluttering or to remodel a master bathroom and leave your 30 year old kitchen untouched.
- If you’re planning to live in your home for a few years after remodeling so that you benefit from the updates, then a 60-80% ROI may be an acceptable return. In this case, visit a few local new homes or builder design centers to see what today’s buyers like and try to replicate it to maximize the ROI when you do sell.
Strategically investing in pre-listing updates should be a well thought out process with different options priced out next to projected impact to sale price and speed of sale. For many homeowners, this process can take upwards of 3-6 months from planning through project completion before being ready to sell, so start early and invest wisely! Feel free to reach out to me at [email protected] or (703) 539-2529 if you’re thinking about selling your home and want an opinion on the most effective way of investing in pre-listing updates!
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.