A friend is considering selling a property “when the market recovers,” whenever that may be. I don’t expect to list it anytime soon. For most of the past year we have been treated to weekly news stories telling us the real estate market has “bottomed out.” True enough. So has the Titanic. It is still a long way back to the surface.
Anyway, she asked advice about installing upgrades to the house in the meantime. Many real estate brokers encourage this, of course, since we all prefer to market sparkly homes with all the bells and whistles. They frequently point to enthusiastic articles in magazines aimed at homeowners. For example, "The Cost vs. Value Report" article in a recent Remodeling Magazine issue gushes that a seller commonly can recover “86% of the cost” of sensible remodels of kitchens and baths through a higher sale price. I’m an odd broker who rarely recommends anything more than cosmetic spit and polish. The reason should be obvious: 86% is not 100%. I may not be a math wizard but I can do simple sums. If a higher sale price doesn’t cover the cost of the upgrade, there isn’t much point in it.
Things are a bit different for one’s own home than for an investment property. At home, a remodel may still be a luxury expense, but we all treat ourselves to a few luxuries. It makes some sense to enjoy new cabinets, ovens, and tubs yourself, rather just handing them unused to the next owner. If you eventually recover 86% of the cost, so much the better.
The folks I find fascinating, though, are the serial remodelers. You know the ones. The construction never quite stops because the house is never quite right. They seem to believe they’ll finally find happiness if they just can find and install the right granite countertops and oven ranges. It seems unlikely to me, but who knows? Perhaps they are right.