You’ve been looking for a home and you’re on a pretty tight budget. You’re well qualified and have the down payment in hand along with a strong preapproval letter. There’s a home that just came up and you like the neighborhood and the specific location and the price is just about right. Everything looks good but the home needs work, more work than you had hoped to have to do. Should you pull the trigger? This is a common scenario for many home buyers today, especially in Coastal California where the prices are high and new construction nonexistent. It may come as a surprise to my out of state readers, but there are almost no new subdivisions in an around California’s best metropolitan areas. This leaves home buyers with the choice of buying (and paying for) fixed up homes or buying homes in need of updating; sometimes considerable updating.
As our buyers considers whether they are up to the task of redoing this 1970’s all original gem, here are a couple of thoughts worth considering. The first thing is to ensure that you have adequate money to complete the project, or whether you will only be able to go half way. I recently sold a home that the sellers did an amazing job on a total fixer, that is, did an amazing job on the inside but were unable to finish the project because they underestimated the costs of doing the whole job. Understanding costs are “job one” for any would-be home remodeler and/or buyer. So how does one accurately assess costs and how should a buyer approach offering on a property that needs improvement?
Depending on the scope of the project, remodeling can be fun or a total nightmare. When looking at the home you are considering purchasing, look at the expensive, not fun stuff first. This would include plumbing (is it copper already or galvanized?); electrical (how large is the panel, 100 amp or 200 amp which we need today to handle all out electronics?); sewer line (is it clay or cast iron and is it filled with tree roots?); roof (has it ever been replaced or even serviced?); mechanicals like heat and air (does it even have air and how old are the systems?). These items are not only costly, but let’s face it, they’re boring and while absolutely essential, they just don’t give any satisfaction to our creative juices. For the purposes of our example, let’s just say that all these items are sufficiently working and won’t require imminent replacement.
So we are talking kitchen, baths, paint, floors…. and windows? Windows can easily run $20-25,000 for a whole home, but add a lot of value in not only aesthetics but energy efficiency. Kitchens; how much does it cost to redo a kitchen? Of course it all depends on the materials (a theme you can count on throughout your project). You can get a 10 x 10 IKEA kitchen cabinet set on sale today for $1,899. It doesn’t include the labor to install so that’s a factor. As an alternative, you could order from a custom cabinet maker and easily spend $30,000 or as little as $10,000. This would include finish and installation. I have personally found that Home Depot is not generally the best place to get cabinets. There’s always a great local guy who will make and install custom for the same or better money. As for counters, you can do tile for $1,000 or slab granite for anywhere from $4,500 on up. Appliances are a biggie. You can go Viking or Thermador and spend $20-25,000 or you can go GE Café and get in for $5-7000. Naturally there are even less expensive. See, this is the fun stuff right? But watch out, I didn’t mention the sink, the faucets, the lighting and did you need to move outlets or possibly plumbing to accommodate the new fridge location and the ice maker line? Ugh. The accountants adding machine is making a lot of Chk-Chk, zzzphtit zing sounds… Here’s one way to save a little and that’s Craigslist. It’s amazing how you can find ovens and appliances on CL. For example, I was recently shown a 48” DCS, high end oven and range, that new costs $10,000 for just $2,900 on Craigslist. Also the big box stores are sometimes a great resource, but not always. If you have access to a granite fabricator for example, they can often fabricate and install for less than Home Depot and you get a more unique piece of stone.
Venturing into the bathroom, you’ve got all the same things as a kitchen except instead of appliances you’ve got glass doors and shower heads. Obviously a bathroom is a lot less expensive than a kitchen; that is as long as you are not putting in slab marble and gold plated fixtures. Still a modest bath upgrade will cost $5,000 and an elaborate master suite can easily run $15-25,000. Planning a “per room” budget is a good start to any project. And after all this, you still need lighting (check your local lighting store rather than HD or Lowes because you might find a great returned item or floor model that really makes a room and at a fraction of retail) and paint, floors, doors and molding.
Because a project like this can be so overwhelming and so taxing on so many levels, I would recommend spending a little time at some of these stores just pricing things out, while you are home shopping. Getting an idea of costs is really helpful as you assess the viability of a project and if the project makes sense. I spoke with an agent this morning who told me his listing went multiple, a day after I said he was priced too high. What do I know right? Well, I like to think I know a lot and I said to him, “The home needs $75,000 and when finished, won’t be worth the money the buyer put into it.” Naturally if money is no object, issues like these tend to go away, you’ll just buy already upgraded or you’re going to hire a professional to do all the remodeling and project management for you. For most of us “Do- it-your-selfers” there are project planning sites online that can give you a helpful spreadsheet on what to expect. Remodeling can be something to fear, but also something you can conquer. Th key is to just be honest with yourself, know your limitations and do some homework. What’s the old saying? “An ounce of prevention, is worth a pound of cure.”
Published on 2013-08-02 10:20:13