Myths Of Getting More Than Truths - Improvements To Get More

Myths of Getting More

• Improvements ROI
• Example NEW Kitchen….. OLD kitchen, NO kitchen
• $20k for 100ft well, $40k for deeper well

The way many people think real estate sales works is not really very accurate, I have had many people say to me things like - "Our agent had someone on the hooks but they let them slip by" or, "that realtor is known for underpricing homes" and even 'that realtor is my area specialist".

First off let's look at the truths.

1. You don’t need an “area specialist” to sell your home, although knowledge of the area is good, it is much more important when selling to have a “Listing/Marketing specialist” You see an “Area specialist” is more important for purchase than for sale.
2. The Listing agent is highly unlikely to “Sell” your home, they will likely never ever speak to the actual buyer, the buyer will be represented by a buyers agent. The listing agent acts more like a marketing/advertising/fiduciary duties agent. While the “Sales” aspect is handled by the buyer's agent. (Who btw, represents the buyer and not the home, and is just fine with the buyer buying any home, not just yours).
3. Renovations – This typically comes in the form of "we just did these renovations, now we’ll have the agent in to tell us how great we did". This is a horribly bad idea. I always say this “don’t do your renovations for resale, do your renovations for you, but keep resale in mind.” Let me explain why I say this… Renovations should be done early, and for your longer-term enjoyment. But you should keep the resale in mind so that a $40k reno doesn’t reduce your home value by $40k, (“my god, that kitchen is hideous, what were they thinking? We’ll have to gut it and completely redo it… who uses granite for cabinet doors?). Now that’s an exaggerated version but REALTOR® magazine publishes an annual "Cost vs. Value" report that compares the cost of common remodelling projects and shows the payback that homeowners can expect. For example, a major kitchen or bathroom reno has a 70-78% ROI, a basement remodel 65-75% etc. In other words, if you put $120k into a new kitchen it will likely increase your home's fair market value by $78k - $94k (a loss of up to $42k). Many people don’t believe that, but it's true. Consider this, there was a kitchen there before, that had value, say the relative value of that kitchen was $40k, when it was ripped out, that $40k value is gone, now the new cost of the kitchen is $120k but 1 was taken out and 1 was introduced. It's not like the $120k kitchen was put into a house that had none before, and if it didn’t have a kitchen before, then it was worth less than the identical home that did have a kitchen, even if it was a crappy one.
4. Let’s look at this another way that may make it even a little clearer. Pretend you are on an acreage and you and your next door neighbour have the exact same house side by side. He has a well and you have a well. It cost them $20k to dig a well that was 20 feet, but unfortunately, the water table on your property is much lower and they had to dig a well that was substantially deeper at twice the cost. Your home is not going to be worth $20k more than the neighbour's home because you invested $20k more, it just isn't.
5. BUT WAIT A MINUTE…. I watch a bunch of those flip shows and they always make money. YES… BUT…. A couple of things here, they tend to not take their time into account in that price increase, so they are basically paid a risky wage that is not shown, and - this is the bigger part, they seldom do just 1 or 2 things… For example, they don’t come in reno a kitchen and then leave, they reno the kitchen, taking out a wall to open it to the rest of the home changing the entire floorplan from a semi-formal to an open concept. They do the whole level, (and usually all the levels), so there isn’t a nice new modern kitchen in an old dated home. I have been in some homes that have renovated their kitchen beautifully, very modern and twice the size, BUT, the dining room and living room was left the same and it just looks odd. Also, when the work is not professionally done (including planning it from someone who ACTUALLY knows how to plan), then there tends to be a lot of wasted potentials
6. So, not to say that your beautiful renovation Is not going to GET you more money, but it may not NET you more money. It may, but don’t count on it. Even a lot of flippers get taken aback when they end up selling for less than they invested. In fact, that is probably more often the case than not. BUTTTTT, let's look at a few ways that you can enjoy a healthy ROI and come out ahead for the money you’ve invested.