If I haven't mentioned this during our time together, let me be sure right now to set this real estate "law of nature" firmly in your mind:

THE ANSWER TO ALMOST EVERY QUESTION IN REAL ESTATE IS:

"IT DEPENDS."

There is no hard-and-fast rule stating that a dollar infused into your house will pay a dollar back when you sell.

Every single, unique and specific use, application, situation, and scenario involving the expenditure of that dollar falls somewhere on a spectrum.

That spectrum has a name: "Return on Investment" or ROI.

When we are brought in to help sell a house, one of our key responsibilities and areas of expertise is to share with the seller where exactly to apply those dollars (or elbow grease) for maximum, positive ROI.

Let's go over the fundamental, "works every time" list of those categories, areas, and items as we kick off this discussion.

Phase 1: General Every-Day Maintenance First. Always.

Remember this and you will prosper: Selling residential real estate is about creating and supporting an emotional experience for the buyer.

Those emotions, for the most favorable outcome to you the seller, are:

Happiness
Delight
Relief
Aspiration
Pride
Pleasure
Comfort
Longing
Confidence

Those emotions are created through the buyer's sensory experience in and around the home (and prior to that, by the marketing that features the home).

When a house and its landscape are clean, organized, uncluttered, and present well, the buyers spend their mental and emotional energy imagining their life there, their furniture and personal things in place, their morning and evening routines that define who they are.

The buyer feeling those emotions in your house is awash in happiness-related hormones like dopamine and serotonin.

When a house is cluttered, dirty, and overgrown, the buyer's veins are coursing with cortisol — the stress hormone— and the primary emotion is the weight of the workload they would be buying along with the house.

Whether or not you have a single dollar you wish to spend, you (we) can always apply some elbow grease to give the house a straightening-up, a bath, and a (landscape) haircut.

And here's the thing: Completing these no-cost or low-cost to-do's before your house is photographed and especially before a buyer steps foot into it in-person, pays VASTLY more in actual dollars on the sale of the house than whether or not it has upgrades like an AC system, built-in speakers, or a retractable awning over a deck.

Phase 2: Fix Anything That Looks or Feels Like Damage.

Once the house has been de-cluttered and deep-cleaned, the buyers are going to be able to see more and notice more.You want this! You want the buyer to have as full a picture as early in their exposure to the house as possible. This keeps their expectations in check and thereby avoids the "set-up" of inaccurate expectations.

Missed expectations lead to the very costly emotion of disappointment.

If there are areas of rotten wood, peeling paint, cracked or fogged windows, sheetrock cracks and nail pops, torn carpet, etc., that cortisol comes flowing back in.

The buyer's mind changes from the very positive:

"If I lived here, I would be this neat and organized!"

To..."If I buy this house, I'm buying a bunch of repair work with it, and there go my relaxing weekends!"

Not good. Cortisol flood.

You, the seller, in your non-cortisol-flooded and currently-logical brain, thought to yourself as you chose not to make those repairs:

"We can just offer a credit for those repairs, and that way the buyer can choose their own colors. Hmmmm.... I'm actually doing them a favor."

Let me respectfully disagree, and explain why.

What you're actually doing is replacing the buyer's in-the-moment emotion with your expectation for in-the-moment logic.

Logic happens in a completely different part of the brain, the frontal lobe.

Remember, the buyer is experiencing your home from their feeling centers: the amygdala and the limbic system.

Let's try an experiment.

The before and after photo below shows the exact same room, the only difference being a gallon of paint, an hour of a painter's time, and removal of the protective paper on the floor.

But imagine you're the buyer, and every other room looks like the picture on the left.

If you're not looking for a fixer — which MOST of the Buyer Pool is not — then how are you thinking, feeling, and valuing the way you experience this home?

It's very, very hard for a human to jump from "feeling" your home to accurately and reasonably processing material costs, labor availability, scheduling logistics, and the effects those all have on their move-in and their lifestyle.

So you know what they do?

They *emotionally-not-logically* multiply the real cost of the repairs by — on average — about 5 to 8 times. That's the number they assign to those repair areas, and by which they make their decision about your list price and whether to buy the house or not.

To avoid that, and to honor the way buyers of residential real estate experience, process, and decide on a home... FIRST FIX THE AREAS THAT LOOK OR FEEL LIKE DAMAGE.

Ahead of taking the photographs, and ahead of hitting the market.

Fixing areas that look or feel like damage has a vastly, vastly higher ROI — return on investment — than adding an Air Conditioning system, or a hydraulic sports car lift in the garage, or remote control blinds on the west-facing windows.

And if you can't, or don't choose to fix things, then at the very least DO NOT try to trick the buyer with disingenuous photography or flowery write-ups, because all you're doing then is luring them in only to set them up for disappointment when they actually get there.

Often the best approach when a house is clearly a fixer-upper and is going to hit the market that way is to have it professionally home-inspected and saying right up front: Buyer, expect some remodeling work.

By doing that and making that inspection report available to the buyers, you're effectively saying, "We know it has some issues, and we have factored those into the price."

Phase 3: NOW We Can Consider Upgrades.

You've de-cluttered, deep-cleaned, trimmed-up, fixed or replaced damage areas, systems, or fixtures... now we can talk about whether or not to make some upgrades.

Or rather, for many readers: How to think about upgrades you're considering doing, in the context of resale.

Upgrades — meaning, replacing or installing something new and favorable over something that detracts — come with some risk.

MOST upgrades to a home, if they are not fixing or replacing something that looks or feels like damage, ESPECIALLY nowadays with the prices of everything having skyrocketed...

...do NOT have a positive ROI.

Let me repeat that: You will NOT usually recover 100% of those upgrade dollars you spend.

Whether or not you do..... well, it depends.

You CAN see a positive ROI on upgrades if:

You're upgrading something that is completely disharmonious to the rest of the home, oftentimes super-dated light fixtures, for example.
You're upgrading something that is low-cost and easy to install yourself, like swapping out gold or mismatched hinges and door handles with beloved black or brushed nickel.
You're upgrading something that may be undamaged and in excellent shape but is so dated you won't otherwise see it unless you watch Brady Bunch re-runs.

You're upgrading an unfinished area that is already framed, conditioned space that is accessible by normal, code-compliant means, by finishing it and therefore increasing the home's finished living space.
You're upgrading the known-highest-ROI areas like the curb appeal, the front door, or painting light, uniform colors over dark, loud, or too many mismatched colors.
There are also some lower levels of kitchen and bath upgrades that pay dollar for dollar, since those are primary areas.
An example might be leaving the (well-laid-out) cabinets in place while replacing just the drawers and door faces, as well as new counters and backsplash.

Check Remodeling Magazine's Annual Table

Remodeling Magazine goes deep on this subject of cost vs. value year after year, and they publish their findings by region in an easy to read table.

Their highest ROI item for the Pacific NW claims to return just over 92% of the cost, and is — according to them — replacing the garage vehicle door.

I would plug this solidly into the "curb appeal" category, and it's actually something I think about a fair bit on our house (and a lot of others, since the garage vehicle door often makes up as much as 50% of what we see of a house from the curb).I mean... those new, divided / privacy glass doors are friggin' COOL!!!

So What About The Air Conditioning???

Oh yes... right. The AC system!!! Let's focus in.AC will become more and more popular as our climate warms more and more.

In and around Whatcom County, it's still pretty rare.We ***occasionally*** have a buyer client list "AC or the ability to add it" to their criteria, but I would put that at 5 or 10% at the very most.

So for 18 or 19 buyers out of 20, they might say, "Oh, that's nice." But they're not going to make their buying decision on the presence or absence of AC.I reached out to two appraisers I communicate with often, Robin George and John Martinez.

I asked them point-blank: "How much value do you give to a whole-house AC system?"

Robin said, "I'll give it $5K if it's a modern, properly functioning system."

John said, "I'll go $2500 to $5000. It is an item of perceived value, not cost of the feature."

That is a small fraction of what it costs to install AC, nowadays.

Now... considering the "it depends" factor, let's look a scenario where AC would probably reward much more than $5K:You happen to list and sell in the midst of a super-hot summer and/or heat dome, and the buyer, exhausted and overheating, steps into your home that you've kept at a cool 64F, and feels relief and happiness on a level she's been dreaming of for the past few days.

She could very likely say to her agent, "GET ME THIS HOUSE!"

If adding an AC system really fixes a full-sun-exposure, over-heating situation with the house, like it did with ours, it could return a lot more than $5K even if that's all the appraiser gives it in their report.

Much more importantly, is it going to make YOUR experience of owning the house more pleasant? Unless you're going to sell in the very near future, this question is arguably the most important one to answer.

A Really Smart Question to Ask Before Every Upgrade

It is obviously hard to quantify the exact return on investment of every upgrade you're considering making to your house.

The question to ask upfront is: "What are we optimizing for?"

Is re-capturing dollars the most important thing to you?

Or is customizing your home to fit YOU and your tastes, damn the consequences, the most important thing?

If it's the latter, you can ask this follow-up question about the upgrade:

"Is this upgrade harmonious with the rest of the house and/or grounds, and will it expand the Buyer Pool if we were to sell, or shrink it?"

The more customized and personal your home is to you, the higher the chance of the Buyer Pool being very small. Small buyer pools can mean longer time on market and lower sale price.

Larger buyer pools (and of course the right price + other factors optimized appropriately) can mean lots of traffic when it hits the market, good feedback, multiple / strong offers, and maximum sale price.

If you're going to spend real money on an upgrade or any level of remodel, hit us up for a free consult and let's talk through how it will likely affect your home's value.

Then you can make a more informed decision about whether to go for it, or go back to the drawing board.

Will Theses Remodel Upgrades Add Value to my Bellingham Home?