How NOT to Beat the Housing Bubble
Saturday, September 16, 2006
Okay, so I covered some tips to help you sell your home during this housing market decline (or bursting bubble, depending on your point of view.) But I also wanted to give some suggestions of what not to do if you're trying to sell your home these days.I'm all for staging your house to make it visually more appealing - there's a house on my street in the $600,000 range, with a "Price Reduced" For Sale sign, that has two rooms that look like they were finger-painted in a blood red color... and they wonder why it hasn't moved for the past 3 months...
It's also necessary to make sure whatever is broken gets fixed -- if the home isn't going to pass prospective buyers' inspections, they're not going to pull out their checkbooks (it's regular to see homes here in L.A., with For Sale signs in the front yard, that have exterminators' tents draped over them.)
Where I worry is that desperate homeowners might look to make drastic home renovations to fan the flames of interest and spark a sale. There are a few remodeling jobs that will increase your resale value so it's important to know what to do and what not to do. Check out this 2005 Cost vs. Value Report to get an idea of how much return you might get, based on your area of the country, for what you'll spend on the remodel.
Two major suggestions of what to renovate: do a low-to-medium cost kitchen remodel or add an additional bathroom (if you have the space/correct floor plan - consult an architect or design specialist.)Renovations I suggest you avoid if your selling your home:
- Basement Upgrades - You might be tempted to finish your basement or turn an existing areain your finished basement into a home theater. Or another bedroom. Despite the fact that you may be making the room more livable, more than likely it will not help you sell it and you probably won't get back the money you spend to do the job. Also note, you normally can't count a basement bedroom as another bedroom on your listing (depending on window size.)
- "Invisible" Upgrades - Unless needing repairs, don't replace or remodel anything that can't be seen. Telling people the house has a new furnace, a tankless water heater, or brand new copper plumbing just doesn't do the trick. buying a house can be an emotional and visceral experience. Updates need to be visual and visible. Crown molding can be seen -- new insulation cannot.
- Swimming Pool Additions - You've always wanted a pool, Jacuzzi, or whirlpool spa tub. But not everybody feels the same way. In fact, some people with small children definitely don't want those upgrades. Others with colder winters and maybe people without the extra income for maintenance might find these additions a deal breaker. Adding a pool in a small yard could remove a child's or a pet's play area.
- "Specialty Room" Additions - Don't spend any money to convert a bedroom or family room into a home office, gym, den, or home theater. Those rooms are great for your house, if you'll be staying there a while and you don't need the space. If you've already got a specialty room set up, change it back to the original purpose.
They say the current housing market won't recover until at least 2007 and maybe not until 2008, depending on how the economy reacts. Make sure your house is ready to sell but don't throw money away on renovations that won't provide a return on investment.
Let us know if you need to find a remodeling expert to prep your house for sale. It's a free service to find local experts.
Related Posts:
How to Beat the Bursting Housing Bubble
Real Estate Dictionary
Housing Bubble Humor
Labels: Housing Bubble, Real Estate
