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When they say: renovate for yourself, not resale, they mean it.

Posted by mamattorney (My Page) on
Sat, Nov 3, 12 at 17:05


Follow-Up Postings:

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RE: When they say: renovate for yourself, not resale, they mean i

I agree with you. I think novice buyers or sellers can be persuaded by real estate agents or the various home improvement shows. However, if anyone looks at an appraisal/comp and views what adds value vs. doesn't they will realize no home improvement significantly changes the sq.ft and minor adjustments in qualify ratings are a few thousand bucks.

They should look at a home similar to a car. No matter what you do to it - it is still the base model with fluff that a buyer will like or not but won't increase sales prices significantly.


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RE: When they say: renovate for yourself, not resale, they mean i

I don't feel sad for them.
They did what they wanted to make that house their home.

We have done the same.
And if we don't get that money back in a higher priced sell, we honestly do not care.


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RE: When they say: renovate for yourself, not resale, they mean i

The people who were crazy to pay the 2005-2008 prices in my town of LA are the ones who won't see much pay-back on improvement. Those that bought before or after those dates seem to get their money back. We bought in 2010 and have made major additions/renovations and based on recent sales we would recoup all of the costs if we sold today ... But we aren't looking to sell, so who knows what the RE market here will look like in the future!!


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RE: When they say: renovate for yourself, not resale, they mean i

I suppose "feel sorry" is a bit strong. The place has only been on the market for 9 days - so the owners are realisic about the facts, it's not like they tried to price it $200K higher and then had to reduce, reduce, reduce.

I just know that if I sunk $200K into something and learned I got zero return on it, I'd have many a sleepless night.


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RE: When they say: renovate for yourself, not resale, they mean i

It is only recently that people have viewed real estate as an investment or profit center and believed that RE always went up!

You don't think you are getting any return out of enjoying a remodeled/upgraded house for 10, 15, 20 or whatever years? The problem arises when life forces you to sell too soon ... except in bubble years when we all make crazy money!


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RE: When they say: renovate for yourself, not resale, they mean i

We put tons of money into improving our home. If we sold tomorrow, we'd obviously hope to recoup as much as possible, but we went into the deal realizing that we might not. One can't possibly know what the market conditions will be at the time you decide to sell, so we concentrated on putting in those things that would make a real difference to us in terms of enjoyment of the house. What we did try to do was to keep the level of improvements in line with the house and the neighborhood so to avoid over or under-improving.

As chispa said, it is only fairly recently that people saw their homes as profit centers and believed themselves entitled to get back everything they put into a house and then some.


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RE: When they say: renovate for yourself, not resale, they mean i

sas - I think your attitude is exactly right - do what you feel is best and hope for the best, but be realistic.

I think my problem is that I bought my first house in 2001 and so while I don't think of myself as stupid, I am a product of my times - when housing prices went up, up, up. Our most recent house was bought in 2005, and thankfully, we bought in a stable market - where it hasn't grown in value, but hasn't lost value either. But on the other hand, you can watch Designed to Sell in 2012 and it tells people that $40K in renovations adds $75K in value - every single show.

I guess I posted the thread as a warning that not all markets are like designed to sell and that if you are renovating a 4BR house and ending up with a 4BR house, your market price isn't going to be much different.


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RE: When they say: renovate for yourself, not resale, they mean i

"But on the other hand, you can watch Designed to Sell in 2012 and it tells people that $40K in renovations adds $75K in value - every single show. "

People who believe television shows tell the truth are always going to be in trouble because they have no concept of due diligence.
I swear, I watch HGTV and I love HGTV but I know it is fiction. Just like not taking my medical advice from "Scrubs" neither do I take my real estate advice from HGTV.


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RE: When they say: renovate for yourself, not resale, they mean i

"People who believe television shows tell the truth are always going to be in trouble because they have no concept of due diligence.
I swear, I watch HGTV and I love HGTV but I know it is fiction. Just like not taking my medical advice from "Scrubs" neither do I take my real estate advice from HGTV."

Amen!

Fiction indeed, yet so many think otherwise.


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RE: When they say: renovate for yourself, not resale, they mean i

I built a home in 2006. As soon as it was finished, we spent $100,000 on a gunite pool and paver patios and retaining walls. When I recently refinanced, the appraiser valued the pool at $30,000. But I knew that was coming. Actually, I could get $50,000 out of it if I were to list it for sale. But, the kids and my wife and I get a lot of enjoyment out of it, and we will be here for at least another 12 years.
I have seen nicely done finished off basements return slightly more than what was put into them, but that is about it. (Excluding the flipper situation)


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RE: When they say: renovate for yourself, not resale, they mean i

It's actually listed for $20,000 Less than the listing price in 2007. Maybe they DID do it purely for themselves.


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RE: When they say: renovate for yourself, not resale, they mean i

I don't feel bad for them, unless they are actually underwater and have to sell; I also feel bad for the literally underwater folks down east.


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RE: When they say: renovate for yourself, not resale, they mean i

What's also bad, is paying so much more than what your house is worth now, believing you will never see a day where you will ever recoup your losses, you would like to do some remodeling, but you have already lost so much that it seems pointless to do any more. Then you see all the other people who got lucky to buy at the right time and they got bargains, they have tons of money to do whatever they want with their houses, and you hate them for it. Don't mind me, just venting some more, that's all.


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RE: When they say: renovate for yourself, not resale, they mean i

Oh, and I agree - these home fix-it-up shows and home selling shows have done a lot of damage. Planting ideas in people's heads that they can do anything they want to their houses and they will get a huge payback. And making buyers believe that unless a house is absolutely perfect, it's not worth buying, and you can make the sellers drastically reduce house price because of it. More venting. OK, I'm done. Or am I?

Have a great day everybody!


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RE: When they say: renovate for yourself, not resale, they mean i

We put $30,000 updating and doing some necessary cosmetic work when we knew we were going to list our house.

We broke even, didn't lose any of the money. This was in 09 when the market was dropping.

The work made the house more attractive to buyers and the house sold quickly. Had we not done the work, the house would have taken longer to sell and the market would have dropped lower.

We feel it was money well spent.

Jane


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RE: When they say: renovate for yourself, not resale, they mean i

Another thing to consider: some of that $195K may have been insurance claim money. That area of Illinois has had some severe weather in the past few years... summer storms with microburst tornado-like winds, etc.

Just a thought.


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RE: When they say: renovate for yourself, not resale, they mean i

Thats a good point, ctyptandrus.

We bought our house in 2005 from previous owners who had about half finished a renovation. They bought the house for $500k and put another $200k in it before they ran put of money and patience. They priced the house accordingly, providing photos and bills/receipts from the work they'd done. We did a pretty thorough inspection ourselves and had some contractors and an interior designer in before we put in our one offer of $600--- take it or leave it. They took it, and we immediately spent about $30k to get it move in ready for us. I then took an appraiser's course to make sure our continued renovation would be on a value added basis. Over the past seven years we have put in an additional $300k, but because of the depressed economic conditions of housing in our area we probably could not get back much more than $700k, if that. Our focus now is on self sufficiency and green improvements and conservation management of our 12 acres. We will be ready to sell in about ten years, and hope to break even by then. If not, at least we have enjoyed living in a wonderful retreat that our children love to visit.


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RE: When they say: renovate for yourself, not resale, they mean i

I agree that some of the HGTV shows should start with a disclaimer but I actually learned from some of them. I was getting ready to buy my first house and all I knew about real estate was location, location, location. I had no idea about the concept of over-improving, no real idea about comps or why you don't want to be the biggest and best house on the block or even how improving a home could potentially add equity. After watching a couple of specific shows and learning what questions to ask, I was able to purchase a home in an area that is just beginning its transition and the price reflected that. I am also making improvements that are in line with the neighborhood and on pace with the investment into the neighborhood while improving my own quality of life. I don't watch HGTV or DIY Network anymore but they did have some value for me when I was getting ready to take the plunge. I guess it just depends on who's watching.


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RE: When they say: renovate for yourself, not resale, they mean i

It's interesting to compare my situation with my neighbors. We over-improved our house, but a complete remodel also meant we had over 15 yrs of very minimal maintenance afterwards. It is designed precisely as we wanted, with many more amenities than it had originally. It is comfortable inside and completely landscaped. We can flush a toilet and the water temp in a shower will not fluctuate. We never call the Roto-rooter man. Every outlet is three-prong so I could throw way all those little orange plug adapters. I have a lovely kitchen with a spectacular hillside view and tons of storage.

Our neighbors have a much prettier cottage than ours originally was (nicer design, better quality developer in the 1930's). But they only do things when they have to, as they have the cash. They have one bathroom and all four of the family (plus attendant boyfriends staying overnight, LOL) have to share it. Her kitchen is old with a tiny window looking out onto that same hillside view; it was a big deal for her when she got a new tiled floor to replace the worn-out linoleum. The have minimal closet space, single pane instead of our double pane windows, small blocked-off rooms instead of our open living plan with big master bedroom/bath suite.

But in California, the value of a property is 90% to 95% land. The house means almost nothing. Their return on equity is equal or better than ours (we moved in around the same time).

They win in terms of necessary reinvestment of cash (maintenance and improvements). We win in livability and comfort. They're happy with their situation, and we're happy with ours. When my MIL had to come live with us in 2006, you can believe I wouldn't have wanted to share one bathroom between three people! Heck, it's hard enough just sharing the master bath downstairs with my DH [grin].

Interestingly, about 8 yrs ago I had a RE agent come through the house to give her opinion on the updating we had recently done, and to tell us what more was needed. We had all kinds of improvements on our list, and it was a great surprise when she told us that most of them were unnecessary for salability. She also advised us to do a couple of things we hadn't even thought about, so it was very useful talking with her. She said that the important thing we had done - aside from making the interior more attractive in a contemporary design - was replacing/updating all the systems: sewer, plumbing and electrical.

Most people are like our neighbors. They only improve piecemeal, and are never really finished. So when the house goes on the market, it's a pastiche of old and new. We gutted our cottage and replaced 95% of everything. The remaining 5% was finished off fifteen years later. We included doing that 5% when we took the RE agent's advice to update the kitchen/bathrooms.

In our market, the magic word is 'turnkey'. It won't get us tens of thousands of $$$ back, but what it will do is make the house easier to sell when we decide to leave.


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RE: When they say: renovate for yourself, not resale, they mean i

Jkom51- I'm in the Boston area market and we have a similar situation. An updated standard house will sell for $50-$100k more than the dated house in mild disrepair. The updates will probably cost $150k - $250k to do.

Definitely a bad investment! But, like you, we have made that bad investment because there are so few updated homes available. The land a house is on is really important to me, not just commuting location but the amount of green space around it matters a lot. To get an updated house we would have had to settle for a poor lot or cough up a lot more cash upfront.

Our plan is to never move again, though, so I don't feel as bad about spending money we will never get back.


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RE: When they say: renovate for yourself, not resale, they mean i

The listing price of the house that prompted this post dropped $25K today. It's killing me! I think it is a fabulous and unique house that meets all our needs for a new house; my husband thinks it's ugly on the outside and sterile on the inside. I just want it to go under contract so I can stop looking at it longingly when I drive by.


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RE: When they say: renovate for yourself, not resale, they mean i

WOW! That is a very high end home, but I do think it is lovely. With a family's fur iture and some "stuff" it would be warm and inviting. I really like the back yard, too.


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RE: When they say: renovate for yourself, not resale, they mean i

My neighbors spent (I think) about $20K to turn a beautiful under-roof handmade-mosiac tiled patio area into a room. She's a retired REA who thought that going from about 2300sf to just over 2500sf was going to bring buyers in her (overpriced) range.

The extra room is awful. It is accessed from the house by a narrow door (that used to be a slider to outside) via the 2nd guest room. They put in a weird grouping of hurricane windows so that you have to kind of squint or squat to see the waterfront view that used to be there. And they put a narrow slider to the pool 90 degrees off the waterfront side. It feels cramped and the first thing I'd do as a new owner is tear all the new walls out.

They're now looking for their next set of renters. The first set got fed up with the owners nagging them about the landscaping, which is just barely controllable jungle. The second set is getting run out now by the neighbors, because they have too many people living there and they all drive big trucks that they park on our narrow street.

I don't think they're ever going to sell it for what they've got into it for even just the previous remodel. The room add-on was a stupid gamble.


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