In my line of work I have witnessed and participated in nearly every aspect of the real estate market. One thing that I see all too often, is owners pouring a lot of capital into remodeling their homes in an effort to boost the potential market value of their property. While renovating a property may eventually bolster the sale price, there is always the chance that the homeowners will not recoup these spending losses.
Recently, the National Association of Realtors as well as the the Appraisal Institute have suggested that homeowners forgo major remodeling projects prior to selling and instead encourage an allocation of their resources to making smaller improvements. Relatively small enhancements like refinishing hardwood floors, repainting the walls or replacing cabinet doors and fronts may up the sales price, for a relatively low upfront cost to the homeowners. According to this statement from the National Association of Realtors, these kinds of small improvements yield greater value than larger projects. Essentially, this method looks to upgrade different elements in the home instead of completely remodeling the space.
When considering what kind of improvements to make on a space with the short-term intention of selling, there is a real reason behind focusing on these subtle superficial upgrades. Prospective buyers that have a short time to be exposed to a space tend to respond more immediately to those tangible upgrades that they can see. If there are obvious visual cues for things that need to be upgraded, potential buyers may spend more time scrutinizing the space in search of anything and everything wrong with the space, instead of seeing all of the advantages that come with the place. Buyers often want a home that is move-in ready, instead of places that clearly need some work.
Furthermore, when considering what kinds of upgrades or small home improvements are worth investing in, one should assess whether or not this is a universally desirable improvement. For example, space comes at a premium in New York. Manhattan is the most densely populated borough in New York City, and therefore, it’s no surprise that well-designed, multi-functional storage space is desirable to virtually all New Yorkers.
And although many of these indicators suggest that homeowners should not pour excessive amounts of money into remodeling, there are of course the exceptions. Depending on the location, value and general desirability of a property, it is worth evaluating the benefit of larger scale remodeling projects. Some apartments or homes require a major overhaul in order to fetch a larger sum. In this case, factoring in the cost of a skilled designer and his or her proposed changes may ultimately be worth it. If a space is in a state of disrepair, but is desirable for location or other reasons, the owner may consider remodeling the space so that the potential home buyer doesn’t need to solicit these services and can readily move in.
All of this is to say that property owners looking to sell should focus modest budgets on smaller superficial projects as opposed to sinking more money into a full on renovation, unless they feel that the risk is worth the reward.