This week marks our innagural podcast!!
Being able to estimate renovation costs for home updates is impactful for both the buyer and the seller side. When working with buyers, they may see a home they’re interested in online but they’re concerned that the updates they desire won’t fit within their budget. They may overestimate the costs required for those updates, and perhaps won’t consider homes at a higher price point because of this in
When working with sellers, being able to estimate accurate renovation costs will help to convince the seller to set a more realistic listing price. Moreover, updating a home will help it to sell much more quickly. Sellers typically don’t have a realistic idea of the actual costs of updating their home. Setting up some estimates from contractors will go a long way toward educating your client about the actual costs of updating their home, and will help you to become even more of a subject matter expert as a seller’s agent.
Convincing sellers to make the updates that buyers want is a little more difficult in today’s market. Ten years ago, when the house down the street with the same square footage and the same floorplan sold for a higher price, it didn’t matter that that house had updates that yours didn’t, because you couldn’t see them without going inside the house itself. Nowadays the impact of the Internet and the syndication of listings with tons of photos has made price per square foot comparisons irrelevant. Buyers can see the upgrades they want, and if the listing doesn’t have those upgrades, the offered price will be discounted accordingly.
When considering what to update and upgrade, price ranges and impacts on the buyer should be considered. Buyers make a decision based on emotion within the first 7 steps inside the house. Consider where the seller’s updating dollars will have the most impact. For example, it’s important to focus first on the spaces where updates will have the most impact. Kitchens are the most important rooms in a home. Then, outdoor space is important in terms of updating, especially here in Arizona. Make sure the pool deck is in good condition, either by painting or replacing. Sun exposure fades the decking, and makes it feel old and worn.
Also, try to eliminate functional obsolescence. Sellers shouldn’t out-upgrade their neighborhood. Always consider the impacts of neighborhood on value of upgrades, and discourage upgrades more than the neighborhood requires or supports. Bottom line, sellers shouldn’t price themselves out of their neighborhoods.
What items or material costs garner the best returns?
Paint – inside and out. Recommended interior paint is light beige, light brown consistent throughout the entire home. Keep all one color. $.70 to $1.00/square foot range typically is the cost to paint.
Carpet–Carpet in bedrooms is fine to keep the budget down. #carpetinbedrooms.
Tile for bathrooms-minimum 18” tile is optimal with smaller grout lines. Or even 12” by 24” in subway tile pattern w
orks. If it’s a stone like travertine, you can get away with smaller size tiles. Estimate for 18” porcelain $6.00/ft to remove and replace tile, on average. Of course, get a professional in there to give a more accurate number. Types of tile vary: Ceramic, porcelain – regular and fancy, stone (travertine, marble, slate, flagstone,limestone). Saltillo tile from the 1970s with the heavy black lines is not popular with buyers because they fear costs of removal. Nicer Saltillo tile in a glossy finish that is consistent with existing decor/house theme will go over much better with buyers. Most buyers do not like flagstone.
Cabinets– least expensive updating option is to paint them, then, just replacing the doors is more expensive, or finally, the most expensive option is entirely new cabinets.
Countertops– solid surface such as granite or quartz, at minimum, to update.
Appliances – Stainless steel appliances are the eyecandy of updates. The power of photos of stainless steel appliances on the Internet is that stainless steel appliances make buyers assume the rest of the home is updated as well. Estimates of costs of appliances: $2,000-$2,500 for double oven, $300-$600 dishwasher, $1200 to 2000 for refrigerator. ($3,500-$4,000). Base level appliances are fine.
Bathrooms: estimate of updating the master bathroom is typically in the $7,000-$15,000 range. Shower: $2000-$2500 (glass door $800-$1000); stone surround on tub affects final price.
Hardware: remove brass hardware in home. Maybe paint the hinges, but replace the door handles.
As for the returns your seller can expect, paint, carpet and grass are the best dollar for dollar return. A note about permitting. As sellers, we stick to mostly surface level improvements, but always source general contractors for larger jobs so the right permitting and licensing are in place.
Special note: these upgrades are based on the research found in north Scottsdale in the homes from the last five years, 2011-2016. Everyday and every week trying to estimate will change, with that, please do your own research and do not rely on these numbers.
Over in our facebook group, aptly named Too Many Listings, we’re hosting weekly Facebook Live sessions to share some of the marketing concepts and strategies that we’ve used to build the Sibbach Team’s business to what will be in excess of $100M this year. Sibbach also shares his strategies on how to become a better all around agent. Warning: We’re not normal.
The more you know, the more you don’t know.
When I got into the business I was unaware of how homes were valued. I went for the easiest method available… price per sqft. It’s simple. It boils down all features; lot sizes, backyards, privacy, location in the subdivision, upgrades, floorplans down to one simple factor… the size of the house. Here is a 30 minute video of us explaining the proper way to price homes. Enjoy!
It’s for REALTORS®.
That want to get better at marketing.
And that care about doing the best job for their clients.
So far we’ve shared links to webinars, database mailers, podcasts. All for FREE.