Should we upgrade this old house? Sellers, beware. The answer depends on whether you want to add new amenities for your personal enjoyment, or, if the goal is to yield a decent return when selling. Adding value is critical to empowering your home’s chances of closing the deal in a market that’s still healing. Although we are still technically in a “Sellers Market” the inventory is increasing so the competition between houses is greater. It’s best to make yours stand apart.
Which would you choose in two similar homes — one with shining granite counter-tops, or another with dated counters? A home with a lush, generous pool, or one without? The more visually appealing the home, the more up-to-the-minute the amenities, the more likelihood the value will increase and give you edge when selling. So how do you choose which upgrade to tackle based on return on investment?
We asked a local appraisal company their take on the value of upgrades. Why ask an appraiser? Their job is to objectively assess the value of real property, helping those who own, manage, sell, invest in, and/or lend money on the security of real estate. Appraisers gather and analyze facts, statistics, and other information regarding specific properties and determine their value. Their advice can be priceless in determining which upgrades will increase the value of your home on paper.
“We’re seeing a lot of granite and stainless steel upgrades and hard surfaces, like travertine and wood flooring. I’d say the most popular upgrades are kitchens and bathrooms,” said Mike Jeklinski, SRA, of Elite Appraisals in Ahwatukee,
So what kind of return are we talking about? Jeklinski says you can expect about a 50 percent return on the investment from kitchen and bathroom upgrades. “It’s rarely dollar for dollar, because everything depreciates over time but also potential buyer’s preferences lead to not capturing dollar for dollar for such investments. Kitchens and bathrooms, however, are key areas potential homeowners linger over while comparing homes. It’s always attractive to move into a home that’s already finished as opposed to starting with having to do costly upgrades to your new home right off the bat. This will help an upgraded home sell much faster and for a higher dollar than a dated home.”
And what about pools, always a high priority here in Arizona? “Of course it depends on the area, as more expensive homes typically feature higher end pools. So if a pool costs $20,000, we make adjustments of between $10,000 and $15,000. But there are exceptions when homeowners add extras, such as waterfalls. But typically a pool will yield a 40 to 60 percent return on the cost,” Jeklinski says.
As for flooring, Jeklinski agrees that can be a little tougher to call, since flooring is such a personal choice with which another buyer may not agree. Still, hard surfaces are a fairly sure bet against worn carpeting.
So sellers, beware. Adding upgrades will go a long way in adding value, but give careful consideration and spend wisely. Choosing one project to focus on is a great start, such as re-doing the kitchen. Still, just because a project is expensive doesn’t mean it will pay back more. Often, minor improvements can yield major dividends — painting, refinishing cabinets or upgrading appliances. Even small changes like replacing dated hardware and light fixtures can go a long way in getting great results. Last bit of advice, be sensitive to the value in your neighborhood and try not to over improve if selling your home is on the horizon.
• Bonny Holland is with Keller Williams, Sonoran Living in Ahwatukee Foothills. Reach her at (602) 369-1085, www.leadingluxuryexperts.com or on Facebook and Twitter.
Bonny Holland is with Keller Williams, Sonoran Living in Ahwatukee Foothills. Reach her at (602) 369-1085, www.leadingluxuryexperts.com or on Facebook and Twitter.