The remodel option: A smart way to go

Some tips for buying or selling residential properties – that needs updates – in existing neighborhoods

Nikki Duke

In Clark County’s hot residential real estate market, there are not many lots available to build or existing homes for sale. For buyers, the smartest choice may be to consider buying an existing home in the neighborhood or desired location you choose. With this decision, buyers must decide how much below the asking price might be accepted or if the asking price is right on. They must also know who can help when the plan is to remodel a purchased home.

It’s an easy time for sellers. Sellers know that they will get offers. For the buyer, the key to any purchase is buying at the right price that will allow them to turn the purchase into a dream home. The buyer must know how much of a budget to set to refresh the home.

In a time where sellers are sometimes faced with bidding wars, it’s essential for the buyer, hoping to remodel, to find the house that isn’t faced with multiple offers, potentially due to a certain level of needed improvements. Our remodeling division is seeing sellers who are investing $15,000 or more prior to listing a home as these sellers can recoup their costs many times over. For buyers who work with us, we are seeing a different kind of request.

How can a buyer find a diamond in the rough? First, be certain to have your remodeling contractor on board. Having your contractor walk through a house with you prior to making the offer to purchase can help you assess how much money your ideas might cost and which ones are possible. Next, have a realtor who is well-versed in representing the person or family who plans to refresh. The kind of realtor who can help understands existing values, but also can help you to choose a home that doesn’t place you in a position of not being able to recoup your investment dollars should you sell later. There is a difference between a realtor selling a home and one selling with knowledge about a home that will have a new value upon being refreshed.

Some houses that need a little fixing need simple things. Painting might cost $5,000+. Recarpeting or new flooring can cost as little as $2,000 to nearly $12,000. Simple improvements such as paint, carpeting and flooring can produce returns for a seller that is three times the amount spent. So if you are the buyer, you shouldn’t be afraid of a home that needs paint or flooring if you are worried about having to put money into a home before you move in.

Agents commonly advise that the right price tag is key to selling a home. For a buyer wanting a fixer upper, your agent should find the home that is priced right for the construction budget or is a home that is not receiving any offers – regardless of price.

While many buyers might be inclined to make an offer thinking they’ve calculated costs appropriately, we advise to schedule a walk through with your contractor. Some contractors may charge a small fee for walking through with you, but in the long run, it could be worth it. Some houses that are older may need structural/electrical/plumbing improvements. Other houses may not have been improved because of access issues, material availability or even homeowner association architectural control issues. A good contractor will help guide you in thinking of such situations.

Here’s a list of some suggestions if you plan to buy or sell a house needing updates:

Sellers:

  • If you underprice your home in recognition that it is priced to allow someone to put money into it, you should communicate that;
  • If you’ve received bids for improvements, you may want to present those to potential buyers;
  • As odd as it sounds: If you don’t receive offers, consider raising the price.

Buyers:

  • Be prepared to drop contingencies on inspections (because you walked through with your contractor);
  • Bid quickly upon making a decision;
  • Be prepared to write a personal letter about how this will be your dream home.

Nikki Duke is a refresher, realtor and restoration expert at the Legacy Company. She can be reached at 360.852.2035 or NDuke@LRestore.com.

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