Homebuyers looking for houses that are in move-in condition comfortably purchase their new home knowing that the only projects they need to concentrate on after closing are which items of furniture they wish to move from their old home to their new one, and where to place them when they get there.
This is obviously a less stressful way of purchasing and moving to a new home, possibly in a new neighborhood as well, and works very nicely for the homebuyer who can afford to buy that move-in condition house. But what about those homebuyers who, for reasons of trying to stretch their budget or for purposes of buying a house with the potential to be something special, opt for a home that needs major renovation?
A homebuyer taking on a project of renovating or extending an existing house needs to make a lot of decisions before even making an offer on said house. When leaning towards a project of this size, the prospective buyer must take into consideration what the finished market value will be as compared to what his costs are — meaning the price of the house plus the cost of the renovations.
Usually, when dealing with a customer looking to take on such a project, the first question I’m asked is, “What do you think it will be worth when I am finished?”
Now, I could easily say, “It will be worth a fortune once you are done!” or something just as encouraging, which is what this buyer wants to hear, but I have learned that this wonderful projected value always depends on factors not taken into consideration when the project actually begins. What are those considerations? Personal interior-decorating tastes!
What happens if, in the course of renovation, the buyer decides to design the new additions of space in a manner that only works for him, which might be detrimental to the resale value of the property in the future? What if I told him it would certainly be worth “X” amount when he was done, thinking he would be designing the house in a practical way, but later I see that he decided to be a little too creative, and this creativity lowered the final market value of the home? How would I explain this when they finish the project, invite me to behold their creation, and then say to me, “Whaddaya think?” I could probably only mumble something, since what they created will have left me speechless.
“How bad could it be?” you ask. Well, years ago, I sold a house that basically only needed a coat of paint and a new kitchen, and I felt that after those changes, the house would be worth much more than the cost of putting in the kitchen and painting. When the homebuyers called me to see their finished product, I came into the house expecting something beautiful, only to behold a room full of royal-blue kitchen cabinets and matching countertops. My thought was, “Who will ever buy this house if they decide to move before it finally falls apart?”
The homebuyers were so obviously in love with it that all I could say was, “It looks so new and clean,” and they did not seem to notice any hesitation on my part.
Recently, I was again invited into the home of someone who had renovated and wanted me to see the renovations. As I walked through the house, they showed me a kitchen with all white cabinets (yes, easy sell in the future), but as I looked down I realized they had installed lavender countertops with iridescent sparkles. I cannot even imagine where they found them, but they obviously loved them, so I figured if they sell, countertops are not so hard to change.
I continued to look around, expecting a lovely eating area in the potential space we had seen and admired when they had purchased this property. But all I saw was a wall and no place to put a table and chairs to sit in this kitchen that I knew they had spent a large fortune on.
“Where is the eating area?” I asked.
“Oh,” they said. “We did not want to spoil the new kitchen with a table and chairs, so we put the eating area down the hallway and put up this wall with a window so we could use that area as a den instead.”
“Really,” I said. “And how far down the hallway is the eating area?” I asked, because I could not see it anywhere.
“Just keep going to the end of the hallway and then turn right towards the living room,” they answered.
That I needed directions to get there really said it all!
The moral of this story is, if you are buying a house that needs renovation and you are renovating with a mind of staying there for 30 years or thereabouts, you can utilize any creative direction that suits your taste and lifestyle. But if you are renovating with the thought to possibly sell after a few years, it is important to create a space that will be appealing to the larger percentage of homebuyers, so it will be an advantage that yields the best market value for that renovation. Consulting with an architect or interior designer to assist you with your renovation might pay for itself in the additional market value that can result from their input.
Anessa Cohen lives in Cedarhurst and is a licensed real-estate broker (Anessa V Cohen Realty) and a licensed N.Y.S. loan officer (FM Home Loans) with over 20 years of experience offering full-service residential, commercial, and management real-estate services as well as mortgage services. She can be reached at 516-569-5007 or via her website, AVCrealty.com. Readers are encouraged to send questions or comments to anessa@AVCrealty.com