January 8, 2021
In a world of glamorous home renovation Instagram accounts, endless designer HGTV programming, and unprecedented abilities of following new construction build processes from behind the computer screen, the average homeowner is constantly exposed to real estate’s latest, greatest, and most stylish trends. In fact, the perpetual bombardment of the “next best thing” can lead to decision paralysis as sellers consider their own home renovation or remodel. We know the feeling, as it’s the second-most common question we receive during any pre-listing walkthrough of a home: where to start? It’s a daunting and seemingly unrewarded task: sinking money into a home you’ll no longer own in a matter of weeks. We could certainly understand the sentiment if it wasn’t crucial to getting your home sold for the best price, in the least amount of time.
In order to offer impartial and consistent advice to our clients, we view each potential renovation project through the lens of a project’s individual PVR (Percent of Value Recovered). In this instance, PVR is simply a ratio between the seller’s net profit and the initial cost of the investment. If you spend $15,000 on the complete remodel of a Jack-and-Jill bathroom, but only get $5,000 returned at closing, you have a PVR of 33%. Said differently, for every dollar you spent on the renovation, you would receive thirty-three cents in return. It doesn’t take a financial wizard to see those numbers don’t add up.
Thus, with maximum PVR in mind, we find a consistent trifecta of winners. Whether the home is $200,000 or $2,000,000, painting remains the greatest return offered to sellers out of any pre-listing work or staging we recommend. On average, our sellers' PVR for interior painting is anywhere between 100% to 200%. Compared to the PVR of every other project a homeowner could possibly tackle those numbers are staggering. Updating or refinishing flooring is a close second and can make the world of a difference to a space. While the PVR for updating flooring is often 90-100% (meaning you may only break even at closing), it can significantly decrease a home’s time on market by offering the perception of a move-in ready space to potential buyers. Thus, while refinishing worn flooring may not directly increase the home’s asking price, we still see an indirect dollar returned as shorter days on market equates to stronger offers and ultimately higher purchase prices. The same is said for our third favorite (and wallet approved) pre-listing recommendation: updating a home’s light fixtures. Swapping out the heavier brass chandeliers or otherwise drab overheads for chic and trendier designs can create a dramatic first impression, and often at a price that is surprisingly budget friendly. Ask any of our sellers: once the paint is freshened, carpet is replaced and new light fixtures are sparkling, they become reluctant to leave themselves!
If sellers are looking to tackle a major project, homeowners will typically see the most value for resale in a complete kitchen or master bathroom update (with the kitchen prioritized over the bathroom). Per the National Association of REALTORS® Research Department’s 2017 Remodeling Impact Report, kitchen renovations and upgrades swept 1st place in the rankings of both a projects’ appeal to buyers as well as a projects’ likely value added to the home for resale. But perceived ratings aside, the PVR for kitchen remodels actualizes around ~60%, which is certainly disheartening given the time, inconvenience, and expense of a kitchen upgrade. Fortunately, the appearance of a kitchen remodel can often be achieved by simply painting cabinets, swapping cabinet handles, and buying a new appliance package. As such, our recommendation is rarely to invest in a major rehab of any space, unless there is significant damage, structural defect, or the homeowner wishes to enjoy the improvements in the meantime.
Ironically, the best pre-listing advice we offer clients has an incalculable PVR as the most impactful changes in a home are usually free: decluttering, de-personalizing and removing taste specific decor. With this in mind, we often become clutter-free cheerleaders to our sellers as we help our clients adopt a minimalist mindset prior to listing their home. By clearing the surfaces of cabinets, tables, and counters, the home becomes the center focus of the showings, not the hand-knitted knick-knacks. In addition to coaching our sellers on the best pre-listing practices, we also offer clients complimentary staging consultations complete with color palette recommendations for painting, trusted vendor recommendations, and coordinating the schedules of any necessary work.
If you’re interested in learning more about our process or would like to schedule an in-person consultation for your own home, please Click Here.