Not Just Price Tag, Scope of Work
Discounting for a home’s “vintage” condition is inherently subjective.
Some Buyers don’t want to tackle anything more challenging than painting a Bedroom (if that).
Others ” especially if they have contracting skills (or access to them) ” are up for remodeling the Kitchen, Bath’s and anything else that needs attention.
How does a prospective Seller (or their Realtor!) put a number on everything?
Step #1 is to tote up the things that the average Buyer would want, priced at the going (retail) rate.
That number will at least get you in the ballpark, assuming the Buyer is an owner-occupant (vs. re-seller; see below).
To fine-tune the number, however, one must take three additional things into account:
Price Point (Step #3). First-time Buyers have less money . . . for everything. After scraping together earnest money and a down payment, many of them don’t have anything left for remodeling.
Or have the time for it.
As a result, $50k of remodeling on a $200k house (at least in the Twin Cities) is a much bigger deal ” and requires a commensurately bigger discount ” than $50k of work on an $800k house.
Absolute Cost of Project (Step #4). In my experience, fixer-upper’s (the people, not the houses) divide into two types: amateurs and pro’s.
Or if you prefer, part-timers and full-timers.
Once the total updating budget gets north of, say $100k, the number of retail Buyers shrinks dramatically.
Which leaves the pro’s, who subscribe to “buy low, sell high,” and need enough upside to pocket a profit at the end.
That often means a steeper purchase discount once the total project cost trips six figures.
Market Conditions; Inventory (Step #5). Like anything else in real estate, market conditions trump ” or at least influence ” practically everything.
So, in a Seller’s market, the discount for a tired home can shrink dramatically if there’s nothing else for sale and Buyers are desperate.
Meanwhile, in a Buyer’s market, the discount typically has to be especially mouth-watering to entice reluctant (or financially conservative) Buyers.
In other words — surprise, surprise — it’s all about supply and demand . . .