To Upgrade or Not for Selling?

Question

We are currently working on preparing our former first-home-turned-rental-house to sell. We are getting a new exterior paint job and touching up the outside (replacing broken sidewalk and fixing negative drainage).

Those are givens, but now we are trying to decide whether to spend the money to replace/upgrade items in the kitchen and 2 bathrooms. This house is in south central Kansas (near Wichita) and would be a first-time home buyer house.

Below is the kitchen. We have considered replacing the countertop, adding a backsplash, and replacing the flooring (probably in that order of priority).

This is the upstairs bathroom. We have considered changing the flooring here as well, and possibly going with a pedestal sink.

This is the downstairs bathroom. The only thing to really do here is possibly a pedestal sink.

Since we live out-of-state, the work would almost surely have to be contracted out. Since I would like to get the house on the market as soon as possible I see two options:

1) Do all of the work, including upgrades to Kitchen and Bathrooms upfront before putting the house on the market

2) Do the "givens", put the house on the market; If it does not sell within 2 months, then make upgrades

We are just not sure that there would be a positive return on the money spent on the upgrades. Option #1 would get the house on the market roughly June 1st. Option #2 would get the house on the market roughly April 26th. Thoughts?

Brian Oney · Answer

@Mark Langdon Thank you for the response. Our realtor did say that we would think through what upgrades, if any, to do once the outside work is done and we walk the house again. I have done what window shopping I can on the internet, but no clear cut preferences from that.

Bill Gulley Yeah, we had to replace the stove about 1 year ago and we were just going to let the DW die, ha. I did consider replacing the DW, like you said to make it match the white facade of the other appliances, especially since it would only be a couple hundred dollars. Is the mismatch of colors a fairly big stickout to buyers?

What type of new, off-white floors would you recommend? The downstairs bathroom has a white tile that looks pretty good. The upstairs bathroom has vinyl like the kitchen. I'm not sure that I want to spend the labor $ for installing tile in the upstairs bathroom (the upside is that it is a small sq footage).

We were originally told that with the "givens" our asking price could be $68-72k (roughly $45-48/sq foot). No asking price was really quoted for the upgrades. One thing that does help us out, is that after re-measuring the house it appears to be roughly 1900 sq foot not the 1176 that the county thinks it is or the 1500 that we gave the realtor to get the $68-72k range. Unfortunately we still owe $76k on it (bought at wrong time & then we both were laid off).

Bill Gulley · Answer

I'd say tile or vinal, the better grade. You do need to have someone hit some open houses and see what buyers expect. I'm just saying at that price or even up to say 84,900 you'd be in line with that and leaving that counter top (again, unless there is damage). :)

Account Closed · Answer

I didn't see this before.  It appears you are already going to be bringing cash to closing, so if it were me I would not improve the property. If you spend $5K on improvements, you would need to sell the property for $90K to break even.  (Loan balance plus improvements plus agent commission plus closing).  Unless you are certain you can get much more, I'd not throw good money at bad.

As for the square footage issue, that has to be resolved.  The appraiser uses the assessor data and will want to know why there is a discrepancy. If you've got un-permitted additions, that's a whole other can of worms. In this conservative lending environment, lenders and appraisers aren't ignoring those kinds of discrepancies.

J. Martin · Answer

Btw, isn't Arlinton, TX where the show with Hank Hill is from?..

Bill Gulley · Answer

What's the asking price to be?

Pedestal sinks look nice, but buyers will notice the lack of storage in the bathroom, then they of adding storage units and that just clutters it up. New lighter (off white) floor yes.

If that counter top isn't damaged I'd leave it and match floor to it. I'd be more concerned with a black DW and white stove, pick one. :)

Mark Langdon · Answer

You have to know the market and comps to help you decide along with your purchase price and how much you want to make on this. For example if all houses at the price you want to sell it has granite; then you need granite etc. If all you houses at the price you want looks like your pictures then why do anything. It also depends on high tight the market is. If yours is the only house on the market you have the power. If there are hundreds of houses on the market that look like yours than it will be tough to sell. You usually do not get the 100% return on new improvements (ROI) so you could be wasting your $$$. Bottom line is to know your market first and that will tell you what you should do to see if it's worth it.

Brian Oney · Answer

Kristine Marie Poe I often ask myself "Why?" on the possibility of improvements too, haha. Seriously though, I am primarily focused on the "must do's" and then was only considering the improvements to possibly sell the house faster. But that is why I actually prefer Option #2 from the original post - to not consider any improvements unless it doesn't sell within the first 2 months. That way I do avoid paying the money and not getting a return on it.

Brian Oney · Answer

Bill Gulley So new tile in the kitchen (along with white DW), as long as it isn't an over-upgrade versus comps, right?

Kristine Marie Poe What is the best way to address the square footage difference? The only addition to the house does show up in the county records, so I think I am ok there. Would I just need to pay for an assessor to come out and measure it?

Brian Oney · Answer

J. Martin Hank is from a fictional town of Arlen, TX

Kristine Marie Poe The main buyers from my earlier discussions with the Realtor will be FHA (~90%). There haven't been too many comps lately, but into mid-last year they were running the $45-48/sq foot. An investor there would be paying more like $30/sq foot. My main motivation for improving the kitchen would be to emotionally hook someone quickly on buying the house, haha. The kitchen is great sized for this old of house (1910), but my only real concern was it being too "dated".

It is nice that my wife is the more optimistic one about things, because as you can tell I always see the bad :)

Bill Gulley · Answer

But the subject is in KS. :)

To Upgrade or Not for Selling?

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