How To Maximize Your Budget
We can all picture our move-in ready dream house. Unfortunately for many of us, this dream house is way out of our budget. The great news is that there are a lot of houses out there that have the potential to become your dream home with just a little imagination and work (ok some more so than others).
There are actually certain factors that are proven to make a house sit on the market longer and sell for less money. Some of these things you can fix and others you have no control over. Knowing what factors to overlook is crucial to getting the best home for the least amount of money. This is where I can help. Though both personal and professional experience I've learned how to get the best bang for your buck.
Personally, if we're being honest, I hated our first house when we bought it. The home had outdated everything, doors to every single room on the main level (even the kitchen and family room), seven different types of flooring in a less than 1000 square foot space on the main floor and it smelled like cat pee. Sounds awful doesn’t it? So, you may be asking why in the heck we bought that thing. It was easy, we loved the location and we saw the potential. The house was walkable to our church and a less than 5 minute drive from a historic downtown area we loved. Plus, the things we didn’t like about the house could all be changed (relatively) easily and for a lot less money than buying the same home that had been updated and was move-in ready.
At a time when the market was so hot everything in our price range was going $10-20k over asking we got the home for under list price. The work we did (and hired contractors to do) built immediate equity into the property and gave us the exact updates we wanted. Plus, we were able to sell the house for almost $100k more just over two years later.
If your budget is tight and you’re trying to maximize the amount of house you can buy for your money, being willing to compromise on getting a move in ready house can save tens of thousands of dollars or more! Plus, keep in mind, you’re going to pay for every upgrade a home has, whether or not you would have chosen it yourself or plan to keep it long term. There are certain things it actually PAYS to overlook and certain things that could spell disaster or reduced value long term. How do you know? Ill tell you!
It Pays to Overlook...
Weird paint colors. Homes with outdated yellow beige walls, bright neon or very dark paint colors sell, on average, for thousands less than other (otherwise identical) homes. This is something I actually get excited to see as a buyer's agent when looking to get my client a deal because, odds are, these funky colors are scaring off other buyers and there is less competition for the home. Listen, I know painting is NO fun but it is the easiest (and usually cheapest) fix. If you can DIY it the cost is a couple hundred dollars for some good paint at most…and then you can get the exact color you want rather than paying a premium for every wall being the exact same neutral color.
Clutter. People have A LOT of stuff. A saavy seller will declutter and remove extra items or oversized furniture prior to putting their home on the market. Why? A cluttered home is less attractive, looks dirtier, feels smaller, and screams that there’s not enough storage in the space. These negatives can turn other buyers off and be the difference between someone else writing an offer or not. In fact, staged homes sell on average 73% faster and for between 6-20% more than un-staged or poorly staged homes. Why? To put it simply, staging makes it easier for potential buyers to visualize the property as a future home and decide how they will use the space. So, if you can visualize the space in an unstaged or poorly staged home you can take advantage of a great opportunity to save some money!
Old fixtures. Just like paint color, old fixtures can make a home feel completely outdated. Changing out door knobs, hardware or light fixtures can work wonders to update a space, the cost is minimal and these fixes are pretty straightforward from a DIY perspective.
An “outdated” home. Ok, hear me out on this one. Know that you’re going to pay for every upgrade in a home, even if it’s not what you would choose. I know, I know, move in ready homes are SUPER attractive because they’re ready to go day 1, but again, you pay for the convenience…even if it’s not exactly what you want. If you want to maximize your dollar on a home, look for one that requires primarily cosmetic updates. If you’re really willing to commit to maximizing your money, non-structural renovations in the kitchen or bath can also immediately increase value, build equity into your home and again give you EXACTLY what you want…not just the previous owner’s idea of a dream kitchen or bath. Little word of warning about this though...this rule mainly applies to cosmetic updates. Take a close look at the age of non-cosmetic features of the home like the roof, plumbing and HVAC. These systems can be incredibly expensive to replace and you generally won’t recoup your investment here. Because, lets face it, you expect the roof, plumbing and HVAC to be functional when you purchase a home. Plus, sinking $20,000 into a new roof isn’t nearly as satisfying or enjoyable as the same amount into a bathroom or kitchen.
Think Twice Before Compromising On...
...things you cannot control or modify. Odds are, if you decide to sell your home in the future, your potential buyers will have to be willing to make the same compromises you did. And even if you don’t sell, some of these compromises can impact your quality of life, and again, unlike being able to renovate the home itself, there’s not really much you can do to fix them.
Location - The saying goes, “like the home, love the location” for a reason. You can change a lot of things about a home to make it more attractive or valuable, but location isn’t one of them. That’s not to say you can’t compromise a bit on area to save some money…just know what you’re getting into here. A less optimal school district, living next to an industrial area or purchasing a home home off of a busy road will allow you to get more house for your money but those are things you cannot change and so if you decide to sell, you will likely be making the same concessions made to you to your buyer. If you have no intention of selling in the future, consider the long-term impact of the location and difference in quality of life it might bring. These factors can be different for everyone depending on your personal situation but might involve things like commute time, convenience, safety, noise level, cost of a private education, proximity to leisure activities, etc. Really think long and hard about how these factors will impact you before making a concession here because there’s generally not much you can do to remedy them.
Your Neighbors - If you love the house, scout the neighborhood or surrounding area. What did the other homes in the area sell for? Are the yards or any common areas kept up? Do the houses look well taken care of? Have there been any recent police reports or crime in the area? Do your research so you’re not surprised by anything after closing. Of course, you want to feel safe where you live but you also generally don’t want to be in the nicest house in the neighborhood either. If the other homes are a lot cheaper or look like they need some work it will bring your property value down and, like location, there’s not very much you can do about it. So, do your research on your surroundings because they don’t just matter from a home value perspective but also a quality of life perspective. One exception to this rule might be buying in a transitional neighborhood. If you get in early to an area that is being updated you can get a great deal on a home, BUT you are hedging your bets that an area will continue to improve and there are no guarantees here. Your agent can help you look up local zoning changes and building proposals to know exactly what improvements are intended for the area. This will give you a better idea of what the area will look like over time.
Huge Structural Changes. I get it. I too am in full blown HGTV renovation mode most of the time I look at houses. Thinking about knocking down walls to open up rooms and making huge structural changes to a home to improve its layout can be a lot of fun (and, if we’re being 100% honest here, a bit addicting). But there is a point where cost is going to outweigh benefit and some changes may actually be impossible due to the structural integrity of the home. Taking out load-bearing walls can be EXPENSIVE. Big steel beams can run tens of thousands of dollars depending on size and space. This is not something you want to be surprised by after closing. So, getting a quote by a licensed contractor is strongly encouraged if you want to make big changes. While a great agent can help you visualize the space and talk you through changes that would help improve the home, he or she is not going to be your best source on actual cost or feasibility of a renovation (unless they also happen to be a licensed contractor and/or structural engineer). Plus, you don’t want to get your heart set on a change that can’t happen or that is well outside of your budget.
Overall, it is entirely your choice of which house is right for you and your family. The above are just some factors you might want to consider but every situation is entirely different. The most important thing is that you are happy with your purchase and that it is the best fit for you!