Wednesday, January 14, 2015
Necessary Upgrades, "Upgrades" & Over Upgrading
Ever heard these terms before? I swear that I didn't just make it up!
One of the first slides that I have in my presentation when meeting with a prospective new seller is "What will my home sell for?" Pretty important, right? It's something that I take a lot of time to talk about. But even after going through the slide that says that you won't get out of it all the upgrades that you have put into it, I have so many people that will continue to tell me all of the upgrades they have put into the home to justify the price that they think that it is worth.
So I thought that it would be a great idea to talk a little on here about Necessary Upgrades, "Upgrades" and Over Upgrading.
What are Necessary Upgrades?
Necessary upgrades are things that you have done to the house because it was necessary for your comfort while continuing to live there. This includes NEW roof, furnace, a/c, hot water tank, garage door, etc. Things that have broken that you needed to have fixed for the convenience of your living there no matter if you sold it or not.
We can also include updates in this portion too. These are items that were necessary to update if you want to get the home sold. Painting old paneling, removing wallpaper, fixing broken items, replacing the hardware in the kitchen to give it a more modern feel, etc. They are still things that you are putting money into, but money that you won't necessarily recoup back from the sale of your house.
What are "Upgrades"?
Yes, I purposefully put these into quote marks. These are those lovely items that a seller thinks were absolutely necessary but will have no impact on a buyer. The reason for some of these is because of the way that a buyer and a seller will see things differently. I had a client once that was selling her house above market value despite advice from her real estate professional, and put laminate throughout the the 1st level living area. This was a neighborhood where hardwood was almost a standard and should have been used instead, but it was an upgrade in her mind.
What are Over Upgrades?
These are upgrades that you have made to your house that were a great upgrade and makes the home more desirable, but won't get you more money necessarily. Your house is in a small subdivision where the average home price is $130,000 ~ for example ~. The homes are 10+ years old. Everything was just average when they were built and some of the neighbors may have done a few upgrades here and there. YOUR house has granite counter tops throughout, double headed shower with sauna, spay foam insulation throughout, real hardwood flooring, custom cabinets, marble time flooring in the bathrooms & kitchen, hand-lain stone patio and porch with attached sunroom. You get the point. With all of the money that you had put into these upgrades you wouldn't be able to recoup that money.
Okay, Angie....what is your point on all of this? When you are doing any updating to your house because you're thinking of selling your home, keep these in mind. I promise that when I meet with you and we speak about the pricing of your home, it's going to be about the Market Value that it is going to sell for...not the upgrade value.