Should Home Sellers Remodel Before Selling Their Houses?
(before photos from a few of our past projects)
As a home stager, we get asked this question a lot:
“Should we remodel to get the home ready for sale?”
Being in the San Francisco Bay Area, we have a lot of older & historical homes that are Victorians (1840-1900), Edwardians (1905-1914) and Doelger (1920s-1940s).
As you can see from the before photos of some of our past staging projects, we did these types of homes a lot. Especially the Doelger homes. They often remain completely un-remodeled and not updated since they were first built in the 40s and 50s.
Most of the time, the answer I gave to sellers is “No.” This was largely due to the limited timeframe (30-60 days) for the house to be ready for sale.
The type of staging clients we worked with on this type of homes usually wanted to go on the market very quickly. There was no data that suggested that the homeowners should wait and remodel the outdated kitchen and baths instead. Especially in the price range that these homes were selling at, most of the competing listings in the neighborhood had the same outdated kitchen and bath. This meant for selling the homes, the homeowners simply needed to invest in minor work and cosmetic refresh.
The Decision to Remodel is Complicated
The process of preparing the home for sale is to help homeowners to get the maximum ROI back on their initial investment. This means the initial purchase of the home plus any improvements that have been made to the house. There are many important factors to consider before you recommend remodeling for your home sellers:
The Scope of the Work
Are we talking about a light refresh that is fairly cosmetics (think of it as doing a Botox for your face): For example, refacing/repainting kitchen cabinet, updating appliances, etc? Then absolutely. These types of work will generate ROI for the sellers and mostly like will not delay on market time.
The Timeline & Possible Delays
If it is a major update (think “nose job” where you have to open walls, break structure down, etc.). There is currently a shortage in labor and construction materials, plus major remodels tend to have delays. You may be missing out key on-market time. In this case, the seller will most likely not able to get their full ROI back in such a short timeframe.
Costs for the Remodel
While it is true that kitchen and bath remodels generally have the highest ROI when it comes to resale value. However, we have to take into consideration of when the sellers can recoup that ROI. According to USA Cabinet Store,
The industry’s standard ROI for mid-range kitchen makeover falls between 50% to 60% of your overall budget for remodeling. For instance, if you spent $69,000 redoing your kitchen, then you can expect to recoup around $34,500 to $41,400.
Meanwhile, if you opt for a smaller kitchen upgrade, then your estimated ROI is 75% to 80%. For instance, if you spent around $24,000, then your recoup is between $16,800 to $19,200.
Also, your location will affect the expected ROI on your kitchen upgrades. For instance, if you’re living in the Pacific region, then your expected recoup is 93%, while the national average hits at 68%.
It also Depends on Your Market
For most of our home staging projects, (unless it was a house flip) most of the work done were cosmetic fixes: exterior painting and minor landscaping, removing outdated carpeting, refinishing hardwood floors, install new carpets, and repaints. Here is an example from one of our recently staged & sold projects that sold $300k over-asking.
This was mainly because our staging clients usually came to use 1-2 months before they wanted to put their homes on the market. There were simply not enough time for the homeowners to fully recoup the investment on the full remodeling work. Not to mention, in the Bay Area, homes moved very quickly. By having major remodeling work, this could seriously delay the on market time. As you know, in real estate, time is of the essence. It even says so in the sales agreement.
If the homeowner is not planning to sell their homes for a few years, then it makes sense to do the remodel. Simply because they will not only enjoy the ROI during the resale, they also get to enjoy the result of their remodel as well.
When in Doubt, Have a Discussion with the Agents
As a home stager, it is our job to make sure that we are doing what’s the best for the sale. It is the same for the listing agent. An agent who is experienced in selling in the neighborhood is your best ally on this as a home stager. They know the market and they know the timeline. I would have a candid discussion with the agent to weight the pros and cons, especially when there is a shortage in construction materials and labor currently.
