Joined: 15 Oct 2013
Location: Lehigh Valley, PA
Sell or renovate and sell?
My fiancÚ currently owns a house in Allentown (east side), and he is debating whether to sell or to do some cosmetic renovations and then sell.
He and his ex-wife purchased the house together about 10 years ago, and when they got divorced, they made a large mistake: they estimated the value of the house if they had sold it at the time, and they put a lien on the house in his ex-wife's name for half of the estimated profit they would've made. That figure is $12,500. While I understand this was a ridiculous mistake to make at the time, we are now trying to figure out how to best resolve this situation.
He cannot re-finance the house in his name and lock in a better interest rate without her signing off on the lien, which she is unwilling to do. Thus, he is looking to put his house on the market, pay off the lien once he sells it, and bank the remainder of the money. The problem is that he had the house appraised in fall 2012, and it appraised at 120,000. He owes $105,000 on the house. After paying off the lien, this would leave him with a grand total of $2,500, minus half of the realtor fees and costs of selling the house.
He is considering doing some cosmetic renovations to the house - painting, installing crown molding, replacing carpet, new toilet, fixtures, etc. in order to increase the sale price of the house. He's hoping to increase to around $130,000 to at least make some money off of the sale.
Is this realistic with only cosmetic changes? It's a 3 bedroom, 1 bathroom house with a detached garage, off street parking, a corner fenced in lot. I'm not sure how much the cosmetic costs will run - maybe $2,000 - $3,000? He's handy, so he could do most of the installation by himself, but the cost of materials will still be a factor. Is this work worth it?
Tue Oct 15, 2013 7:46 pm
oldguy Senior Member
Cash: $ 718.00
Joined: 21 May 2006
Is this work worth it?
I doubt, the materials will cost $5000 (if you get decent pad/carpet). And if he gets an extra $10,000 for the house the reals estate commission will go up $600. That leaves a $4400 profit if he can do everything himself. That's a lot of labor for only $4400 (of course if he is unemployed it might be worth it).
The $120k appraisal was year ago, real estate across the US, on average, has gone up about 22% in that yr. If you can, it might be good to wait another years and see if it goes up another 15% or 20%. And then sell it "as is" (maybe do some cleaning and painting) for about $150k to $160k.
That's a bet that I would take (others may not agree).
Tue Oct 15, 2013 9:26 pm
Wino Senior Member
Cash: $ 113.80
Joined: 03 Aug 2012
I mostly agree with oldguy's assessment.
I think that paint and other purely cosmetic changes are good ideas. If the toilet looks like crap then I'd suggest replacing it. It's an easy job, and you can get a good-looking toilet for $150 to $300. Instead, though, CLR and Whink might do the trick. Also repairs such as damaged sheet rock or anything else that screams "not maintained" should be done before the house is shown.
I'm giving a "no" to adding carpet. If he likes, bump the price by $5K and give a "$2K Carpet allowance." Let the new owners pick their color. If he "must" do the carpet because it looks worse than just worn and aged, then pick something very neutral and fairly light-colored. Something tan or similar should be chosen.
The crown molding is a bad idea. That's very expensive and hard to install properly. I'm good at math, but it still sometimes takes me two cuts to get it right. That's probably because I almost always insure I'm about a half-inch too long when I cut it. I then remeasure and make the final cut. But it's very difficult. I hope he has a good compound miter saw to use, along with a sharp blade. The corners are the hardest part, and he really should practice because both ends need to be nearly perfect to get it right.
One last thing, air the house out very well before putting in on the market. A radon test will almost always come up positive if the place has been left cooped up over a Winter in the PA area. That's a trick local buyers use to cut the price. I know, because it happened to me in Pittsburgh. I didn't drop the price, though, and just put it on the disclaimer. I had priced the house to sell, and it sold, anyway.
Wed Oct 16, 2013 7:32 am
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Joined: 09 Feb 2009
No, definitely not! I'm a handyman by trade and figuring in hiring someone to install carpet could easily run you 2-3k depending on square footage. Fixtures for bathroom and elsewhere can add up, molding and crown can easily run you up to 1k just for material if your doing the whole house. Plus why not just be done with this problematic home, reduce the stress by not renovating and terminate his relationship with his ex by settling all expenses.
Risk comes from not knowing what you're doing. (Warren Buffet)
Wed Oct 16, 2013 3:11 pm
clydewolf Senior Member
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Joined: 27 May 2012
Re: Sell or renovate and sell?
quote:Originally posted by mainegal88 Is this work worth it?
Only do some painting and replace Well Worn carpet.
What would turn you off from making an offer on this house?
Wed Oct 16, 2013 6:05 pm
coaster Senior Advisor
Cash: $ 1626.30
Joined: 11 Oct 2005
IMO, a painted strip a couple inches wide at the top of the wall, done in a nice dark contrasting color, can enhance the "eye appeal" / "presence" of a room almost as much as crown molding does, and is a whole heck of a lot cheaper; only the same caveats apply: it has to be done well (perfectly straight and sharp edges positioned exactly at the border) or it looks like crap.
Paint and carpet are usually your most cost-effective ways to increase the saleability, but ask yourself some of the questions posed above; maybe it's not worth it due to other considerations: location, local market conditions, the "other interested party", etc; sometimes just trying to dump the sucker is the best bet. (sorry)
Thu Oct 17, 2013 4:48 am
leafsincere New Poster
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Joined: 18 Nov 2013
In my own opinion , I'll rather repair my house or renovate it rather than sell. My house has it sentimental value for me. I don't think selling will make you feel comfortable at all because you'll stiill have to wait for the right buyer and it might took you so long to buy another one:) However it depends on you too. just weigh the pros and cons then before you finally decide:)