Home improvements for resale?

[pnw_guy]

We have a SFH in a nice area of Seattle but are thinking of selling in the next year or so. Quite a bit of our house is outdated. For example, our kitchen cabinets are old and we have some older appliances. Another example would be our bathroom, where we have some old light fixtures and beat up linoleum.

My question has to do with getting our house ready for resale. In this market, should we not invest any money in making these upgrades? Or, should we do some renovations (e.g., put in new kitchen cabinets from Ikea with some cheap stainless steel appliances)?

One thing that occurred to me is that we need to make enough sweat equity from the improvements that it also pays the additional transaction costs of the sale. For example, if we put $15K into the kitchen and it raises the home's overall value by $15K, we've actually lost money due to the fact that we have to pay transaction costs like realtor fees on the $15K increase to the overall value (not to mention the time value of money).

For additional context, all we'll do with the money if we don't put it into the house is VTSAX in a taxable (all tax-advantaged accounts are maxed).

Cheers!

[franklin4]

As you are thinking, any improvements need to really increase sales price to be worthwhile. You should talk with a couple agents to get their thoughts closer to when you'd sell but my understanding is that right now improvements aren't necessary. If you can update the house completely that might be different...

Although you mentioned light fixtures and if you can get new ones for a hundred bucks that might be a good idea. You'll never know one way or the other.

Just walked through an open house that was cluttered and would have been nicer vacant. They should have moved out and staged, or at least put half of their stuff in storage. But the AC was running and working nicely - perfect day for that!

[pnw_guy]

As you are thinking, any improvements need to really increase sales price to be worthwhile. You should talk with a couple agents to get their thoughts closer to when you'd sell but my understanding is that right now improvements aren't necessary. If you can update the house completely that might be different...

Although you mentioned light fixtures and if you can get new ones for a hundred bucks that might be a good idea. You'll never know one way or the other.

Just walked through an open house that was cluttered and would have been nicer vacant. They should have moved out and staged, or at least put half of their stuff in storage. But the AC was running and working nicely - perfect day for that!

We could probably get 90% of the house remodeled in the next year, though it would be a ton of time and effort to do it ourselves.

To your point about AC, my wife has been telling me forever that we should put in central air. Though I've resisted because I know we won't get the $10K back out when we sell. Given the current heat wave, I'm wishing I had listened to her...

[Dicey]

Normally, I'd be a fan of doing the work, but the market is insane and this listing tells a different story. It belonged to a friend of a friend. Look carefully at the photos. The kitchen is laughably outdated, but the house is immaculate. One bathroom has been updated, but the rest, other than carpet and paint, is original. Clearly the owners have moved out and it's staged.

https://www.redfin.com/CA/Walnut-Creek/2091-Stratton-Rd-94598/home/1610650

Tl:Dr -
Bought in 1993 for $325k
Listed 4/21 for $1.235M
Sold 5/21 for $1.7M

If you want to post some pictures, maybe we can give you more specific advice.

[uniwelder]

In another posting you mentioned wanting to buy land and build a house. If that’s the case, why wait a year to sell? Why not just sell now since the market is so ridiculous, and then just rent until you get the new house built? I’m assuming you’d be renting a place anyway during the construction phase, unless you figured on moving directly from this house to the new one. Who knows what the market will be like a year from now.

[pnw_guy]

In another posting you mentioned wanting to buy land and build a house. If that’s the case, why wait a year to sell? Why not just sell now since the market is so ridiculous, and then just rent until you get the new house built? I’m assuming you’d be renting a place anyway during the construction phase, unless you figured on moving directly from this house to the new one. Who knows what the market will be like a year from now.

I would love to sell now but we're not quite ready for a couple of reasons. First, it's going to require a job change for my wife and she need's some time before making the change. Also, we need to stay until early 2022 so we can live in it 2 of the last 5 years and forgo paying tax on the appreciation.

Hoping the market holds out for another year...

[pnw_guy]

Normally, I'd be a fan of doing the work, but the market is insane and this listing tells a different story. It belonged to a friend of a friend. Look carefully at the photos. The kitchen is laughably outdated, but the house is immaculate. One bathroom has been updated, but the rest, other than carpet and paint, is original. Clearly the owners have moved out and it's staged.

https://www.redfin.com/CA/Walnut-Creek/2091-Stratton-Rd-94598/home/1610650

Tl:Dr -
Bought in 1993 for $325k
Listed 4/21 for $1.235M
Sold 5/21 for $1.7M

If you want to post some pictures, maybe we can give you more specific advice.

This is a useful data point. Thank you.

Will try and throw together some photos to show some problem areas.

[Morning Glory]

In another posting you mentioned wanting to buy land and build a house. If that’s the case, why wait a year to sell? Why not just sell now since the market is so ridiculous, and then just rent until you get the new house built? I’m assuming you’d be renting a place anyway during the construction phase, unless you figured on moving directly from this house to the new one. Who knows what the market will be like a year from now.

+1 give it a good scrub and repair any obvious damage. Let the new buyers choose their own kitchen cabinets.

[Metalcat]

Hmm...

If I were planning to sell in 2022, I would sell now and rent until then just to take advantage of the insane market.

[uniwelder]

Hmm...

If I were planning to sell in 2022, I would sell now and rent until then just to take advantage of the insane market.

It sounds like this used to be a rental property that they just moved into this past year.

...we need to stay until early 2022 so we can live in it 2 of the last 5 years and forgo paying tax on the appreciation.

[Metalcat]

Hmm...

If I were planning to sell in 2022, I would sell now and rent until then just to take advantage of the insane market.

It sounds like this used to be a rental property that they just moved into this past year.

...we need to stay until early 2022 so we can live in it 2 of the last 5 years and forgo paying tax on the appreciation.

Ah, lazy reading on my part

[AccidentialMustache]

Work the actual math. Yes, 2 years gets you an exemption for taxes on part of the appreciation. On the other hand, if you sell in a hotter market you get more money. That could cover the taxes (and then some) depending on how it works out.

[former player]

I'm not sure that a partial upgrade of a house is worth it.  As far as I can tell the ones that seem to sell easiest are the ones which are either fully renovated or not renovated at all.   (My neighbours had a lovely new kitchen diner on an otherwise tired house and it took months to sell in a hot market.)   And whichever state a house is in the best way to get offers is for it to be (a) immaculately clean and (b) staged/uncluttered.

In your case you have a liveable house in a good area of a desirable city and demand is not going to be a problem. I wouldn't do any serious renovations. I might do some minor work (maybe new linoleum in the bathroom, maybe updated light fittings in the more obvious places) so that the pictures look good at first glance and the first walk through looks good - it is surprising how superficial most people's judgements are.  I'd let whoever buys it buy their own new appliances.   I would clean remorselessly (and probably have professionals in) and have everything in working order: no undone bits and pieces, squeaky or sticking doors, and so on.  Washing paintwork and touching up any obvious damage is often as good a fix as fully repainting.  I would think about having it staged: I would certainly have it look as though real people don't live there.

And in a hot market I would only sell once once I had a place I wanted to buy either locked in or a safe bet.

[Metalcat]

I'm not sure that a partial upgrade of a house is worth it.  As far as I can tell the ones that seem to sell easiest are the ones which are either fully renovated or not renovated at all.   (My neighbours had a lovely new kitchen diner on an otherwise tired house and it took months to sell in a hot market.)   And whichever state a house is in the best way to get offers is for it to be (a) immaculately clean and (b) staged/uncluttered.

In your case you have a liveable house in a good area of a desirable city and demand is not going to be a problem. I wouldn't do any serious renovations. I might do some minor work (maybe new linoleum in the bathroom, maybe updated light fittings in the more obvious places) so that the pictures look good at first glance and the first walk through looks good - it is surprising how superficial most people's judgements are.  I'd let whoever buys it buy their own new appliances.   I would clean remorselessly (and probably have professionals in) and have everything in working order: no undone bits and pieces, squeaky or sticking doors, and so on.  Washing paintwork and touching up any obvious damage is often as good a fix as fully repainting.  I would think about having it staged: I would certainly have it look as though real people don't live there.

And in a hot market I would only sell once once I had a place I wanted to buy either locked in or a safe bet.

I don't necessarily agree. It depends on the market.

I definitely got a boost selling my old place and a discount buying my new one because of minor cosmetic details. And I can say that factually because both were condos with identical units for sale around the same time.

However, I bought and sold at different times. I bought during a reasonable buyer's market and sold in a hot seller's market. The cosmetic differences had much less impact in the hot seller's market for sure.

Buyers who don't have much choice become A LOT more tolerant of seeing things they'll need to change. Meanwhile, when I bought my current place during more of a buyer's market, the sellers were having a brutal time with it because it was so overwhelmingly hideous.

So for OP, if they sold right now, minor renos wouldn't really matter. But who knows what the market looks like in a year from now.

[Sibley]

Different market, different kind of house, but:

Parents are buying an un-updated house for 189. Very similar houses in the neighborhood have sold recently for 200-210. (Updated means kitchen, bathroom vanity, flooring, paint) Based on the math here, I don't see much value to anyone in my area updating their house to sell, its basically a wash.

[PMJL34]

We would need to see pictures to give you actionable feedback.

From what you say, I would do nothing except some super minor fixes/updates like former players said.

[sonofsven]

I think do nothing, or very little. Safety things, yes, but as has been posted just getting all of your stuff out first will make a better impression.
I think "cosmetic fixer" is a really smart marketing strategy. It encourages buyers that they are getting a deal and that they are savvy buyers that can see an "easy" fix where others can't. Sometimes it's even true.
But if it's really just cosmetic, then it really isn't necessary in the first place.
So just do improvements that you want to do, knowing that it may not really increase the home value.

[lhamo]

I would not renovate now.  Between labor shortages and supply chain issues any job is going to be pricey and more time consuming than normal.   

Depending on where you are I might be in the market in 6-12 months!

[norajean]

As long as new owners can live in it, no need to renovate. Sell now before the bottom falls out of the market, it is already slowing.

[clarkfan1979]

As long as new owners can live in it, no need to renovate. Sell now before the bottom falls out of the market, it is already slowing.

Slowing down is different than going down. If appreciation is slowing down from 15% to 5%, it's still appreciating. Is anyone in a market with any actual declines?