Don’t Renovate and Sell!

home renovationsHomeowners often consider making renovations before selling. They believe the increased value of their home will exceed the cost of renovation. Unfortunately, this is often not the case. For every dollar you spend on renovations, you generally recoup less than a dollar back.  See the annual report in Remodeling magazine, which compiles statistics on the cost recouped of most remodeling projects.

Based on surveys of thousands of real estate professionals, Remodeling magazine concludes that the highest return projects are around 70%, while the lowest are in the neighborhood of 40%. The magazine sends out surveys to thousands of real estate professionals across the country essentially asking for their experience and opinions. The conclusions can’t be scientifically proven, but as the costs of construction are fairly easy to determine there is no reason to doubt the survey’s construction figures. However, I wouldn’t rely too heavily on the specifics of cost recoupment figures. I have seen the surveys they send out and there is simply no way to compile figures in any truly scientific way. Who really knows how much a particular home would have sold for if the kitchen hadn’t been renovated?? Rather, the opinions of thousands of real estate agents, appraisers and other real estate professionals are probably fairly accurate in a general sense. They should be used as a general guide as to which projects result in higher or lower cost recoupment, and very approximately what to expect.

Interestingly, according to the study, renovated kitchens and baths recoup somewhere around 55-65% versus other projects that return more. Common real estate wisdom says that kitchens and bathrooms sell homes. So what’s going on? The answer to this conundrum is that nice kitchens and baths make homes appeal to more people and easier to sell, but are just not valuable enough to recoup the initial investment.

The value proposition of renovating your kitchen and baths looks much better when you do the renovations a few years before you sell your home. You also get the chance to actually enjoy the renovations. Most real estate agents consider kitchens and baths fairly new up to around 3 years after renovation. For example, you spend $50,000 on a new kitchen and enjoy it for 3 years. You then recoup 65% of the cost at sale, so the renovations cost you about $17,500 and help sell your home.

In real life, it may be difficult to plan ahead. However, if you are considering making improvements to your home, considering recoupment values may help you determine what renovations make the most sense in the long term. After making improvements, I often hear sellers say, “Wow, I should have done this earlier.”

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Tub/Shower Combo vs. the Walk-in Shower

As with my last post, this question may not be of immediate concern to you, but it is likely to come up sometime in the future if you are a homeowner.

If your bathroom needs remodeling or you are putting in an entirely new bathroom where there wasn’t one before, should you go with a walk-in shower or the tub/shower combination? I think the answer is clear: get rid of the existing tub (in the case of a remodel) and go for the walk-in shower. If you already have a tub somewhere else in your home, this decision is a ‘slam-dunk’. Why would you ever need more than one tub in your home?  In my experience of over 16 years in residential real estate (I actually do talk to people about these things), adults don’t take that many baths. Unless you have several very young children in your home who all need baths at the same time, don’t hesitate to convert one tub/shower combo to a walk-in shower.

The tougher question is what to do if you are renovating the only bathroom in your home and there is not enough space for both a walk-in shower and a tub. Here again, I think the walk-in shower is the answer.  Many people’s biggest concern is about resale. “If I don’t have a tub, won’t that hurt resale?” The answer is ‘no, you will lose some buyers, but you will gain more.’ Those people who just have to have a bathtub won’t buy your place, but the “wow factor” that your walk-in shower creates will substantially help your resale. Even those who thought they had to have a bathtub, may easily change their minds when they see your beautiful walk-in shower.

Why a walk-in shower is just better:

  1. More room in the shower generally.  The sloped walls and thick sides of most tubs make the actual floor space of a tub relatively small compared with a walk-in shower that occupies the same floor space.  With more floor space in the shower it is easier to make room for two!
  2. Tiled walk-ins can be fit into oddly shaped areas or areas too small for a tub.  If you take out your tub, you might be able to make room for a small walk-in shower and a new linen closet.
  3. They are easier and safer to get in and out of – no side wall to step over.
  4. Not as dangerous.  Cast iron, porcelain, and fiberglass tubs are slippery. Most walk-ins have tiled floors which are generally less slippery.  Look for tiles made out of materials that are known to be less slippery.
  5. They can easily be made to look great with glass doors and good tile work.  You can put glass doors on a tub, and nice tile as your tub surround, but it never looks as good as it does without the tub.
  6. Less expensive and a wider choice of great looking fixtures than the tub/shower combination fixtures.  As I noted in my last post, there is a wider choice of fixtures when the fixture doesn’t have to divert the water between the tub and the shower (tub/shower diverters).
  7. No shower curtain.  I know they make pretty ones but there is a big downside.  They are highly susceptible to mold, they don’t stay in place easily, and they just always seem to be in the way.

Tell me what you think!
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Please Don’t Make These Mistakes…

Someday, somewhere, you will probably have to do some work in your home.  If you remember just a few brief words of advice, your home will be just that much nicer for both you and anyone else who may ever live there.

Early in my real estate career, a very wise and experienced real estate professional told me that when you are doing a renovation you ought to spend as much as you can on the parts of the house you physically interact with the most. He was referring to the things you actually touch like door handles, faucets and railings. However, much to my chagrin, many builders seem to subscribe to the opposite philosophy – put in the cheapest and ugliest fixtures you can find.

My number one pet peeve here is the Symmons brand ‘shower exchanger’. This is the device that diverts the water in your tub/shower combination to either the tub or the shower. I am sure you have seen it a thousand times. If you own one, please don’t be offended. I am the proud owner of several of these in my rental properties, although I didn’t install them.

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It is actually fairly solid and reliable. If you are renovating a rental property and you really don’t want to have to worry about having to replace it for a long time, it might not be a crime to put it in. At about $112 for the whole set (valve and trim kit) it is inexpensive. It is also, in my humble opinion, just plain ugly. For only a little bit more (about $130 – $150) you can get a high quality Kohler fixture that looks pretty good, for example:

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and

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You can find these and others at http://www.faucetdirect.com/shower-valve-trim/c241

If you are only shopping for the shower valve, you can do even better for about the same money because you won’t need a tub spout and an exchanger. This leads to my next subject – the walk-in shower versus the shower/tub combination.  I am sure my opinion on this will lead to lots of controversy and contentiousness.  You will, however, have to check back in two weeks to see what all the fuss is about.

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