Property ManagementRemodel or Sell? Convince Your Seller to List
If you have potential sellers who are on the fence about whether to list their homes with you or to stay put and remodel, some startling new figures could help you swing the vote in your favor (and also in theirs!)
Since the majority of clients live in existing homes (only one home in five is classified as new,) most homes will be in some need of minor or major repair. Over 30% of homes on the market were built before 1940, making them ripe for their third or fourth major remodeling. Regardless of whether the seller sells or stays, the chances are very good that they will be making a significant investment either in make-ready, which should include repairs that would add cosmetic appeal or eliminate buyer haggling, or they can choose full-scale remodeling.
A recent study commissioned by The Wall Street Journal has raised some startling questions about the economic feasibility of repairs, especially in light of the bull real estate market.
The study finds that repairs have little to do with quality of construction and more to do with wear and tear. The typical cost of keeping a home up to "current standards" for 30 years is almost four times the purchase price. That means it may be more cost-effective to buy a new or fully remodeled home every 10 years than to deal with continuous repairs.
Housing economist Robert Sheehan ran the numbers on major repairs and replacement costs on a hypothetical brick home of 30 years of age. Priced at $38,300 in 1968, the same home would, hypothetically, speaking be worth $250,200 in today"s market.
Most repairs seem to occur in homes of 10 to 20 years of age, and can include big-ticket items such as foundations, furnaces, air-conditioning, water heaters, pumps, ductwork, decks and roofing, according to The Wall Street Journal.
Buying a new home doesn"t necessarily spare the homeowner. According to the National Association of Home Builders, the cost of maintenance and repairs for a house built in 1990 is only about one-third less expensive than a home built before 1960. Some newer homes aren"t as well built as older homes and require more maintenance than a comparable older home.
By using "standard industry sources," Sheehan was able to arrive at the latest figures to improve the home over a 30 year span.
Bathroom update - $26,194
Kitchen update (minor) - $7,743
Kitchen update (major) - $29,767
Exterior Paint (trim only, three time) - $911
Interior Paint (four times) - $9,161
Carpet Replacement (three times) - $10,201
Furnace/Air Conditioning - $3,088
Water Heater - $642
Roofing - $2,082
Insulation - $68
Window Replacement - $9,796
Door Replacement & Garage Door Openers - $1,861
Deck Addition and Replacement - $18,905
New Light Fixtures - $191
Six Ceiling Fans - $1,323
Smoke Detector - $105
Washer/Dryer Replacement - $814
Finish Basement and One Update - $17,934
Don"t show this list to your buyers, though - they may not want to know that they will be paying four times the cost of the home to keep it up for a 30 years!