Five Smart Homebuyer StrategiesThe National Association of Realtors has announced that there’s a housing supply shortage. Homes are selling quickly and home prices are starting to inch
Mar 2 2020 38376 1
To Sell Your House, Avoid This Common Mistake
I often have clients call me asking if it makes sense to put in a swimming pool or add on to theirhome in some other way. I ask, "Are you doing this for yourself or for resale?"; "How long are you planning on staying in the house?" or "Why are you considering this remodel?"
If they are doing this for themselves and plan to stay a long time, I usually tell them to go ahead and do it. It's their home, and themarket does what the market does.
There are times when the market is not cooperative tosellers. These occurrences happen every seven to 10 years and can last three to five years, sometimes longer. It has nothing to do with your house and more to do with the economy and interest rates.
Don't try to outsmart the market by adding on to your home or doing some improvement you think is going to make your home more valuable. Your house is valuable becausereal estateis scarce and there is more demand than supply. In many areas there is virtually no opportunity to build on a vacant lot unless you tear down a perfectly good house to build a nicer or bigger one.
If you think you are making your home more valuable by adding a master suite or a bathroom, you are probably wrong. Of course there is value to adding square footage or remodeling, but the cost is tremendously high.
We used to say that people could bank on a 3 to 1 return if they made improvements. Of course, making improvements is not always simple. You need to think about where you are going to live while these improvements are being made, and you may need to tap into investments to liquidate the cash and worry about potential liabilities and inconveniences. Do you really want to be supervising a remodel and taking all the risks to go through it?
It's fine to do so if you are planning on enjoying the improvements; however, if you are just trying to make extra money, I think there are better ways. I don't see a return on investment being 3 to 1 in today's market unless you have a way of making these improvements for a far lower cost than I would. If you happen to be a general contractor or have a good friend who is, maybe it makes sense. Making improvements is very expensive, and contractors are very busy. Nobody is getting a good deal from tradespeople these days. They have plenty of work and don't need your jobs
In a nutshell, my advice is this: Make improvements as neededand hopefully do it in good taste. When you are ready to sell, watch the market. Try to sell when the market is on an upswing.
Your improved home will get a lot of attention, but don't be surprised if the new buyer comes in and rips out all your beautiful improvements to suit his or her own needs. The best return on investment is a Kitchen or Bath remodel, painting, flooring and windows. For more tips on remodeling, call Jack Lees at 818 262-0924 or visit my website at: www.realestatejack.com