A friend of mine recently bought a three-bedroom, one-bath distressed sale property in a lower-end neighborhood for $35,000. In two months, she and friends rehabbed it with used appliances and cabinets purchased from craigslist, installed flooring, and paint. The kitchen and baths were the main focus. When they put the home back on the market for $119,000, they had a full-price offer in one day!
A kitchen is the most important part of a home. Kitchens are where we spend most of our time with our families. They are where we entertain, and they are the focal point of many family rooms. It is because of this that kitchens play such an important role in the buying and selling process.
Bathrooms are where we women spend a lot of our time alone. It is our "getting gorgeous" getaway. We like cleanliness, counter space and bath tubs. Not only is it our quiet time, but our entire family makes use of the space on a daily basis, and most people that visit our homes will also see this room. So, this too is key in selling a home.
In a market where fewer investors are flipping homes, most buyers want homes that are move-in ready.
Most buyers want a house that is ready the day they move in, because they come with children and families, and their lives are already hectic enough. This rehab work can be pricey, labor-intensive and take some time, so readiness is No. 1 when buyers are looking for a "home." If you, as a seller, are wanting a quick settlement, then you want your place to be attractive, in move-in condition and priced right.
The main thing to remember as a seller is not to price your property too high where you end up way above your neighborhood values. If homes in your area are selling for $200,000 with clean, but not over-the-top kitchens, then it may not be the best idea to upgrade to granite or marble and stainless steel appliances with a cost of $50,000. The buyers for that price tag may not be looking to buy in that particular community.
Keep it simple. Look around to see what homes in that area look like inside and consider the price range you will want to stay in. Keep in mind whether you are in a lower-end or higher-end neighborhood and let that price-point steer you. Whatever type of neighborhood it is, if you have old appliances, vinyl flooring and cabinets with gold handles you will want to make some changes, or you may have to deduct an even larger amount from your sale price.
I suggest not going crazy and buying everything brand new. Look around like my friend did to get the best deals. Search on craigslist or in newspapers to see if you can get some of the appliances, cabinets and furnishings slightly used and at lower cost. Change the paint and flooring, and pick a neutral color. You can also paint cabinets instead of replacing them, and changing out the handles is simple enough. My oldest and easiest advice to everyone — always remove clutter!
This rehab theory also works well with rental income. The better your home looks, the more money you can make. I know of a duplex right now where the first floor has original everything from the early 1990s. They rent their place weekly in the summer for $1,350 per week. The upstairs is updated and just looks cleaner overall and they are renting for $2,200 per week — same layout, same unit!
The bottom line is a little work can go a long way. You always want to stay competitive with comparable properties, especially in this market.