Do I stay or do I go?
A quirky market has homeowners ruminating over renovations
By most indications, the local real estate market is healthy. Rates are still low and data shows prices are rising across the Merrimack Valley. For a family looking for more space, a couple looking to upgrade, or baby boomers looking to downsize, this fall would appear to be an excellent time to put a property on the market.
Why, then, are so few doing it?
For the second consecutive year, low housing inventory is proving to be the biggest lag on the market, and Vincent Forzese, a real estate agent and owner of The Forzese Group in Amesbury, says that is causing many prospective sellers to worry about becoming buyers in a tight, extremely competitive market. “I honestly think there’s a lot of fear for sellers who might put their house on the market and may not find the house they want,” Forzese says. “When I see a normal inventory and talk to a seller, they may have seen houses they love out there and it gives them more of a sense of comfort to put something on the market. But why would I sell my house when there’s nothing out there that I like or I want?”
As a result, many homeowners are considering renovations to upgrade the size or features of their home. In the right situation, a significant investment in a home can satisfy a homeowner’s current needs and pay off in equity and a better sale price later. But there also can be pitfalls with renovations, notes Deborah Lucci of William Raveis Real Estate and Home Services in Andover. “Sometimes the seller just pumps so much money into the house, they just don’t get it back,” she says.
Should you stay or should you go? Each situation is different, but here are five things to think about:
1. Do your homework
Lucci recently faced this exact choice with her home. She owned a ranch and considered adding on. But she quickly learned while working with an architect that there was no way she could reasonably achieve the flow in the house she wanted. So she ended up moving. “No matter what I did to it, it was not going to flow properly,” Lucci says. “And then there was the disruption of my life. I was going to have to take the roof right off the house. It just didn’t work.” She suggests investing in some architectural plans and getting an estimate from a contractor. “By then, you’ll have your answer,” she says. “I’ll either price myself out of the neighborhood, or I’ll get it back.”
2. See how you stack up
When considering the value of a renovation, look around. An investment that brings your house close to or slightly above the average price in your neighborhood could pay off. But don’t go too far or you may regret it. “The last thing you want to be is the most expensive house on the street,” Forzese says. “You won’t get the return.” Forzese says there is also the “Zillow factor” — a tendency of buyers to look online at sites such as Zillow to see how a home’s price fits in with its neighbors. “Buyers are very educated,” he says, “and you need to make a strong case as to why something would be $100,000 or $200,000 over the average price in the neighborhood.”
3. Know what to expect
Any renovation or move comes with temporary sacrifice. Whether it resembles Lucci facing the loss of her roof for a period of time, or homeowners who sell much faster than they can buy, there is a lot to consider. First, know that your home will likely sell quickly. “Inventory is very tight,” Lucci says. “If a home is priced right, it should go in the first two weeks, easy.” Lucci tells sellers to be prepared to accept a quick offer without then having to buy under pressure. “They can’t have a home sale contingency [clause],” she says. “If the market is extremely competitive, they may have to go into temporary housing.” For buyers, be prepared to act quickly when you find the right property. “Things move really fast now,” Forzese says. “You want to be ready to make a quick bid on a house you fell in love with.”
4. Renovate wisely
Lucci says she often sees homeowners renovate for resale, and not for themselves. “They don’t get to enjoy it,” she says. She sees the biggest returns on renovation investments coming from bathrooms and kitchens, home elements that can be difference makers for prospective buyers. Forzese says additions that are done correctly can pay off, as well. “Adding square footage always helps,” he says. “People always look at price per square foot. You can add value. Do the numbers. If the average cost per square foot in your neighborhood is $200, and it’s costing you $100 per square foot to renovate, you will see a little return there.”
5. Think big picture
The decision on whether to renovate or purchase a new house ultimately comes down to how much you like where you live, and whether that can be replicated somewhere else. “If you love that spot and plan to be there for the next 15-20 years, does it make more sense to stay, rather than having to sell and deal with a crazy market?” Forzese asks. But if you can replicate what you want somewhere else, it might be worth the move, according to Lucci. “Why do all this work when I can walk into this house here and have it the way I want it?” For long-term decisions with long-term consequences, both agree the best thing you can do is to understand your options. “There are so many factors,” Forzese says. “By having all those options in front of you, it helps make the decision a little easier.”
Re/Max On The River
Amesbury and Newburyport, Mass.