When to Skip Home Improvements

In general, I applaud homeowners who want to make improvements to their homes and property.  See, “Let’s Hear it For Granny Flats!”

tear-downtear-downtear-downtear-downteardown2However, at least when it comes time to sell, there’s one scenario where owners are better advised to save their cash, and simply market their home to builders:  the home is dated and functionally obsolete (one hall bath, small room sizes, poor floor plan, etc.); there’s deferred maintenance; and the house is on a piece of land and in a neighborhood that supports new construction (usually the biggest obstacle to a home qualifying as a tear-down).

No Man’s Buyer’s Land (or, “Stuck in the Middle”)

When all of the above criteria are satisfied, putting money into the home is actually counter-productive.

teardown3That’s because $100k (or more!) for a new Kitchen, updated Baths and/or new windows, mechanicals, etc. likely isn’t enough to correct the home’s limitations — and therefore attract an owner-occupant at a good price.

Meanwhile, those same expenditures will raise the home’s price enough to make new construction unattractive, and drive away builders.

See also, “Tear-Down Economics“; “Tear-Down Prototypes“; “Tear-Down Economics, Circa 2012”; and “You Know It’s a Tear-Down When . . .” 

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

Leave a Reply