February 8, 2013

How to add value to a house

Some improvements are important but don't overdo for the neighborhood.

Rants, raves, reviews and resources for Dallas-Fort Worth parents

My mom and dad moved into assisted living last May. I'm in charge of selling their house, a responsibility that feels greater than selling my own home along with my children.

"We're not in a hurry," I told a real estate agent. "We'd like to get as much as we can for it."

I had looked over recent sales in the neighborhood, and viewed the virtual tours. I had a sense of what the place should sell for. I asked what he'd list the house for as is, and fixed up. (Though it's in good repair, the house needs cosmetic help.)

I itemized the improvements I had in mind: Scrape the cottage cheese ceilings, take down the flowered wallpaper, paint the interior and the kitchen cabinets, put in new flooring, replace the wimpy baseboards, and trade dated light fixtures for recessed cans and dowdy drapes for wood blinds.

The agent came back with an as-is price so low a monkey could sell it at a pawn shop. His fixed-up estimate was even more ridiculous, and clearly meant to discourage the effort so he could nab a quick listing.

Given his "extensive" experience, he said, the improvements "if all is done in good taste" (excuse me?) would cost around $30,000 and take months. The upgrades would only boost the selling price by $25,000 at most, so we'd lose money, he said. Forget it.

Ba-lo-ney. I had estimates in hand. Total costs would be less than $15,000, and all could be done in three weeks. Another broker I consulted believed the listed improvements would increase the value by at least $50,000.

I run all this by Bill Wood, a Yorba Linda, Calif., real estate agent and longtime family friend, who's heard it all before.

"For most homeowners, their home is their biggest asset. For an agent it's just a listing," said Wood, who in addition to selling homes, owns 59 homes that he has fixed up and rents.

To an agent making a 3 percent commission, the difference between selling a home for $300,000 and one for $330,000 is the difference between making $3,000 and $3,900. While that difference may not be worth the extra time and effort, for a homeowner $30,000 can be huge.

Now, before every real estate agent in the country writes to tell me about how honorable he or she is, I know that good, honest real estate agents exist. I have worked with them. But every profession -- including real estate -- has its sleazeballs. And sellers need to look out for them.

Sellers also need to find that sweet spot when fixing up their home for sale -- that level of improvement that will help the home sell faster, net the most money, and eliminate reasons for buyers to lowball you, Wood said.

I also asked my real estate-savvy friends Susan and Michael Beane, who own a property investment firm that buys homes to fix up and sell, for their thoughts on how to improve -- but not overimprove -- a property you are fixing to sell:

Be objective. Many homeowners, my parents among them, have lived in their houses so long they stop noticing that the finish has worn off the door handles, that the paint looks grimy, and that traffic patterns are embedded in the carpet. Walk through the home with fresh eyes. List what needs improving. "Most buyers don't have a lot of imagination," said Wood. "If the place has dated finishes and looks run down, in the buyer's mind it will always look that way."

Start at the curb. The property needs to look clean and appealing when you drive up.

Modernize. Even if your home is 50 years old, buyers want updated interiors. "The age of a house can't change, but freshening up the interior with new paint and flooring can make it feel like a new home," Wood said. That's the feeling buyers want.

Tackle the interior. Strip that wallpaper, and paint walls in current neutrals -- taupe, gray and sage. (Realtor beige is out.) Replace worn flooring with neutral carpeting, wood or engineered wood laminate.

Improve kitchens and baths. Updating fixtures and counters can reap big gains, said Michael Beane. "Money carefully spent in kitchens and baths is well invested. The trick is to not overdo for the neighborhood."

Keep the style consistent. Don't force a Tuscan interior on a cute little cottage, said Susan Beane. "Stay true to the architecture."

Bring on the moldings. Moldings are cheap and add instant quality, they agreed. Bigger baseboards, crown moldings and wainscoting have all added value to their flips.

Talk to a few agents. "It pays to be picky," Wood said. If you sense an agent is pushing you to do what's best for them, not you, back away. Look for agents who will sell your home as if it belonged to their parents.

Syndicated columnist and speaker Marni Jameson is the author of "House of Havoc" and "The House Always Wins" (Da Capo Press);

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