Buying or Selling a Home/Selling the largest house in the subdivision
Connie, I have asked this question of Dick Dennis but I would also like to have the opinion of a woman expert. When our house was built, our parents had three feet added to the bedroom side and one foot added to the living room side. They also built an addition off the kitchen that has windows on three sides, built for Mom's house plants and used as a breakfast room. This makes our house the largest in the neighborhood.
In 2003, I consulted three real estate agents who sell houses in this subdivision, on what improvements would be the the most valuable for our house. It was not until 2013 that I discovered that the largest house is also the hardest to sell, especially if you want to get full value for the investment. I believe the advice the agents gave me was designed to provoke a bidding war.
My sister and I own the house; we are in our sixties. When we die, my brother will be selling the house. Mr. Dennis missed this information and based his advice on the present.
The location is great, with a middle school and charter high school within two blocks, a hospital and medical complexes within half a mile, the freeway 5 minutes away at rush hour, churches and non-Christian places of worship within three to fifteen minutes and two major shopping areas within 5 minutes, and no new construction possible; the area is mature with plenty of trees, etc.
Our buyer profile would mainly be the hospital and medical complex skilled personnel such as anesthesiologists; immigrants are also buying here and sending for relatives as they they are able, and some are buying for the nearby schools. That makes for a wide range, from childless young couples to those taking care of senior parents. Our large bedrooms and split level construction make our most likely buyers those with middle and high school children and those who care for seniors in their home. I do not believe this profile will change before the the house is sold.
The average square feet on the split levels is 2,200 square feet. Our subdivision has the largest and most expensive housing in our comp area. However, we are surrounded by more expensive housing, with our square footage, in housing not in our comp area.
Because of the foot print of our house, we would be able to out compete this higher square footage. For example, our re-modeled upstairs bathroom is 5'x11' and handicap accessible, compared to the 5'x8' bathrooms in our subdivision and the more expensive housing. We can add walk-in closets in 3 bedrooms, as compared to one bedroom in both other areas. The kitchen can easily be expanded into the addition that was used for house plants and a breakfast room, making it the largest kitchen.
The realtors recommended that we add a kitchen downstairs and finish the area as a mother-in-suite. We can easily do this as there is room and the area is finished with 2 master bedrooms, a smaller bedroom, a family room, laundry, bathroom and space for a kitchen and the added closet space.
It is legal in our city for single family houses to have rentals as long as the owner lives in the house. This would make it easier for the buyer to afford the mortgage. The realtors thought the house could be easily sold for 10% more than the other comp housing; I am not now sure whether that was with or without the improvements.
They recommended that we remove the popcorn ceilings; I had them analyzed and they do not contain asbestos. The house was built in 1961. It has been well maintained; a new H/AC system was added last month.
The split level houses were sold with the lower level unfinished. All the levels have been finished in the houses. Our next door neighbor has 3 bathrooms and eight bedrooms, for example.
Medical personnel need lots of wardrobe space, because of pro clothing, and teens love walk-in closets. The agents loved our present kitchen, with the island, and it will have continental style organizers even if it is not expanded.
The house will be well marketed, including a home stager and all of the available ways that have developed in those 25 or more years before it is marketed. It will have a low maintenance yard, and all the recommended marketing steps such as de-cluttering will be done.
My question is whether the improvements should be done and whether they are likely to have a full ROI that includes the money my parents spent. Dad was a carpenter and he built the addition alone; the only cost was several thousand for the materials. They paid $2,000 for the extra space when the house was built.
One of the realtors suggested that my brother take out life insurance on one of us to pay for having the kitchens and bathrooms re-modeled before the house is put on the market, and the other expenses.
She also recommended that he use the $10,000 tax free gift allowance for the maintenance in the years before we die. Should my sister and I be gifting him with an interest in the house using our gift allowances?
Thank you. Your advice is greatly appreciated. I know we are not the only persons in this situation. The only advice I have found on the web is to market it as the house that will put the buyers in the position of the Jones' that everyone else will have to keep up with. That advice is not relevant for this neighborhood.
I'll keep this real simple... your questions quite long... A home is only worth what a buyer - at the time the home hits the market - is willing to pay for it.. period
Having the largest home does NOT get you highest dollar per sq foot... having the smallest home gets you more dollars per sq foot...
Remodels you do today, could be irrelevant tomorrow.. that won't help in the sale once you pass the house on to your relative.. what you or your dad spent on the home is of no concern to the buyer, especially if they don't like what you did or the house layout... homes are very personal to buyers.. not logical... logic is for investors they are looking at ROI's
Do what works best for you and enjoy the home..
On all the tax issues please consult a CPA or Financial adviser
I know this answer is short - but take the advise of realtors in your area and remove the emotion from the house like you would an investment, and get the best dollar a buyer will give you at the time of a sale... PS nothing wrong is pricing to get a bidding war... you still get to approve the offer.. Good luck
PSS I wouldn't advocate borrowing money to do remodel... pay cash because you need/want to do the changes not for the next buyer, home prices go up and down depending on the market... not what you do or don't do...