The DFW market is HOT. Sellers can name their price or so you’ve been told by your friends and neighbors. It is true that a lack of inventory and tremendous population growth in DFW has resulted in an aggressive market where prices continue to rise with no end in sight. But does every home sell for a premium? Why do some homes fly off the market in a bidding war while others seem to sit for months waiting for a buyer to come along? Real Estate 101 tells us that location, schools, floor plan, finish-out and overall price point determine the desirability, and thus the “market value” of a property. But one variable seems to outweigh the others in determining which homes sell for the most money in the shortest amount of time: finish-out. 9 out of 10 times, a move-in ready home with recent updates will appeal to the most buyers and demand the highest price.
My husband and I tested this theory on our personal home last year. In 2007 we bought our house as newlyweds and had dreams of remodeling our fixer-upper and making it our own. We “won” the bidding war, in a real estate market very much like the one we are in today. Almost exactly one year later, the Fort Worth market crashed to its lowest point in decades. Naturally, I got my real estate license and became a full-time REALTOR®! Not to worry; I was young, optimistic and full of self-confidence. This also meant that we were too scared (and broke) to do any remodeling to our fixer upper. And so life happened…the market eventually improved, we had a baby, and then another. Our five-year plan to stay in the house turned into nine(!), only then to realize we had not updated anything and we had outgrown our nest. We knew the dated master bath would scare away many buyers, the popcorn ceilings screamed “grandma’s house”, the faux wood Formica counters were cheap and ugly, and all the paint colors that were so on-trend a decade ago felt dark and tired. It wouldn’t appeal to every buyer, but certainly, someone would have a vision for this home, right?! After all, it was just cosmetic fixes! So we tested the waters and I marketed the house “off MLS”. We immediately received several showing requests and anxiously awaited the offers! Except no one made an offer. They were “overwhelmed” by the amount of updating it needed. The feedback was brutal. As an active REALTOR® in our neighborhood, I thought, “Have these people seen the other houses for sale??” My house was a no-brainer for first-time home buyers or empty nesters! But it quickly became obvious that we were going to leave a lot of money on the table by NOT updating some key areas of our home. Our renovation priority list quickly came together.
This is by no means an all-encompassing or specifically recommended list for every property. Each property’s needs are different and will vary depending on the neighborhood and buyer demand. However, the areas below are a good rule of thumb for most homes in most neighborhoods:
A structurally sound home is the #1 priority to buyers (and their lenders). You cannot skip this or deal with it later. Address the problems and provide the buyer with a transferrable warranty on the work. We completed some necessary foundation work (which led to some plumbing work that I’ll elaborate on in a separate post) and replaced the roof which had recent hail damage and was at the end of its useful life.
The kitchen is an important room to most buyers. At a minimum, it needs to be functional. Ideally, it should be an attractive place to gather and break bread with friends and family. Our painted cabinets were original and needed touching up, but were in good condition overall. We added granite countertops, new tile backsplash, and a new sink. We reused the sink faucet we had purchased a few years earlier since it was still in good shape. We replaced the appliances the prior year so they were almost new and still under warranty. Our overall cost was pretty minimal and the new counters and backsplash gave this room the fresh “wow” factor it needed!
Our master bathroom was an eyesore and needed a complete overhaul. We kept the existing footprint but replaced almost everything in this room. We removed the original wall tile and replaced it with sheetrock. We replaced all of the floor and shower tile. We replaced the vanity cabinet and added a quartz countertop. We added a custom, seamless glass enclosure for the shower. New sink, new toilet, new fixtures!
Our hall bathroom was original but in pretty good shape. I knew based on nearby comps that we could do minimal work in this room and still obtain an aggressive sales price. We replaced the light fixtures, painted the walls a neutral color, replaced some dingy caulk around the bathtub and cleaned & scrubbed it really well!
Right after purchasing our house, we were pleasantly surprised to discover wood floors under the carpet in the bedrooms and hallway. I immediately began removing carpet only to find the beautiful oak floors were covered in paint and wall texture. Thus began the multi-year project of experimenting to find a product that removed the paint while preserving the finish and integrity of the oak floors. It would have been much easier to simply install new carpet and call it a day, (or move out for two weeks and have them professionally refinished—no thank you!). But I’m a little bit crazy and I hate carpet! The point remains, your flooring needs to be clean and attractive. If the flooring is worn or damaged, repair and/or replace it so you don’t pay for it twice; once off the list price and again off the buyer’s offer price.
I’m using this term pretty broadly. We scraped the popcorn ceilings throughout the entire house, then retextured and painted. We changed the interior paint colors in all but three rooms of the house. We painted the exterior brick, trim, front door, windows, and garage door. I cannot express how much a gallon of paint can transform a space and make it feel new again!
We replaced almost every light fixture in the house. It’s easy to become blind to little things like this after you’ve lived in a house for a length of time. You simply stop noticing the details. However, buyers won’t miss an ugly, dated light fixture. This is a relatively small expense that provides a big impact.
Get your honey-do list together and tackle those lingering items in need of repair. One of our biggest repairs was a large sliding glass door that had long outlived its useful life. It was ugly, heavy and cumbersome to open and close. We replaced it with French patio doors and the transformation was remarkable. We also repaired our fence gate along with several other items that would inevitably end up on a buyer’s inspection report.
So it sounds like we spent a lot of money on a house we didn’t want anymore, doesn’t it?! Yes, we did spend a good chunk of money updating our fixer upper. Throughout the process, we carefully monitored our expenses versus comparable home sales around us. We discovered some unexpected but necessary repairs at different points during our renovation and a few bids ended up a little higher than originally promised. However, at the end of the day, the additional equity we received doubled our renovation investment. Not a bad ROI in my opinion! I highly recommend consulting with a REALTOR® prior to tackling any major renovations in your home. It’s vital to establish a baseline value and a goal value which will determine your budget and what renovations make sense for your specific property. Living in our renovation was challenging but taught us a valuable lesson for our future home: we wanted to enjoy the fruits of our labor, so we remodeled the next house as soon as we bought it! More about that project and maximizing your renovation ROI in the next post!!