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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Feng Shui – One Agent’s Perspective

A few weeks ago I was walking along Osborne Street near my home in Brookline. I looked up and noticed this large house facing me from the end of Osborne Street.

While the house itself looks great, I particularly noticed how amazing it felt to look down Osborne and see this magnificent house sitting handsomely at the end. It occurred to me that having one’s entrance looking down the street would be considered excellent Feng Shui. I remembered that the developers of the Mandarin Hotel and Residences in the Back Bay had, at great expense and at the last minute, situated the Hotel entrance to look down Fairfield Street in order to improve its Feng Shui.  They even had to move the street lights to make it all work. See this Boston.com article to read the full story.

Feng Shui, literally translated as “wind-water” is an ancient Chinese system of aesthetics  that uses various principles of energy, design, architecture, and other disciplines that work together to improve life. In the context of residential real estate, it is mostly an art related to improving design and function. It is not really about aesthetics (although aesthetics still play a role), but rather about energy and balance so that one’s life works better. In my experience selling homes, I have had clients with varying degrees of concern for and knowledge about how a potential home measures up according to Feng Shui principles. I have also had a couple of clients hire Feng Shui consultants to evaluate their potential home, and I hired one myself to suggest improvements to my last home. I have learned a few things in this process. These are NOT in any way any kind of basic principles but rather just some interesting odds and ends I have picked up.

  1. Real estate agents are generally not that happy when their clients want to evaluate a home’s Feng Shui. They often see it as just another obstacle that may have to be overcome. Fortunately, this is not my perspective.
  2. Rectangular construction is good.  Corners are good. Anything curvy can be problematic. The reasons for this are somewhat complicated and are related to energy and balance.
  3. When you are considering a condo or apartment on more than one floor you should be concerned if your upper floor is not situated entirely over your lower floor. A floor plan that falls into this category is known as the “Philly Duplex.”  These homes occupy half of one floor and then all of an adjacent floor.  The reason for this concern relates again to balance and also to healthy boundaries between your home and your neighbor’s.
  4. Bed placement is crucial. Make sure you place the bed so that you can see the entrance to the bedroom from the bed, but it is not directly in front of you. I did not adhere to this principle at one point and my bedroom always felt wrong – now I know why.
  5. Many, if not most, “problems” can be mitigated enough to alleviate major concerns without reconstruction or spending a great deal of money. You can vastly improve the Feng Shui of your home working with the right colors, proper furniture placement, plants, screens and mirrors, as well as just de-cluttering. There is also a huge amount of information out there and it is fairly easy to find and understand.

Do you have any good Feng Shui stories or principles you would like to share?
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