ABC's of Selling Florida Real Estate

 
 

 
 

Trying to Sell an Over-Improved Home

  Experienced Realtors find themselves being asked certain questions over and over. One of the more frequent questions from a frustrated seller is, "Why can't I sell my home for at least what I've put into it ?" Here's one we received recently:

Question

  I bought this home 3 years ago for $149,000 and have since put another $75,000 into it in improvements. I've advertised it for sale in several newspapers and on at least 8 real estate websites with no success. Only a few have even come to see it. What does it take to sell a home for at least what I've put into it plus a bit of a profit for my efforts ? I'd like to get at least $249,000 for my trouble.

Answer

  What you have told us about how much you have invested in your home does us no good at all. The amount of money you have invested has nothing at all to do with what it is worth as a home for sale.

  Do you think that if you had been given the home, you'd be expected to sell, (forget that), give it away because that's what you had invested in it? Do you think that if you had paid $75,000 too much for the home, someone else is going to make the same mistake in buying it from you?  Of course not. The value of your home as a property for sale is equal to what homes similar to it in your immediate neighborhood have sold for recently.... not much more and not much less. Those recent previous home sales give you an indication of how much people are willing to pay to live in a home like yours in your neighborhood.

  Let's use an example to illustrate the issue. If several homes like yours in your neighborhood, adjusted up or down for features your home has or does not have compared to those, have sold recently for about $180,000 - $190,000, then that is what you home is worth to a family wanting to live where you live. And that is what homes in move-in condition with similar amenities are worth in your neighborhood. If you've put $75,000 in improvements into the home you bought for $149,000 three years ago in a neighborhood where similar size homes with similar amenities have been selling recently for $180,000 to $190,000, there is very good chance that you have "over-improved" your home. You probably thought you got a great deal when you bought a home in a $180,000 to $195,000 neighborhood for $149,000 and perhaps you did. But, once you put more than about $20,000 into upgrades and improvements, you started digging a hole it will be hard to get out of.

  "Buyers willing to spend the $240,000 - $250,000 you want for your home are not likely to be looking for a home in your neighborhood unless there is something truly unique about your home that would make them willing to own the most expensive home in the neighborhood by at least $50,000," says Connie Belmont, an experienced Sarasota FL real estate agent. Normally those prospective buyers are looking in neighborhoods where other homes have sold for about $240,000 to $250,000.

  Advertising your home in all the channels available to you is a good idea but all the advertising in the world will not sell a badly over-priced home. A competent Realtor, acting as a buyer's agent, would be shirking his responsibility to their clients if they advised them to buy your home in your neighborhood at the price you want.

  So to answer your question; at what price will your home sell ? I can't tell you without a close inspection of your home with its features and condition plus an ind-depth review of other recent home sales in your neighborhood. Any competent Realtor can do this for you. But, I can tell you that you will have to reduce the price until it falls within the reasonable range of homes sold or for sale now in your neighborhood.

  For others contemplating buying a home, fixing it up, and reselling it, make sure you deal with a competent Realtor who will do a Comparative Market Analysis on recent home sales in your neighborhood to let you know in what price range you may be able to re-sell the home after your improvements. If that doesn't work out with your plans for the home, including the carrying cost of the home (property taxes, insurance, heating and a/c, any financing cost of your improvements, etc.) while you're upgrading it plus the sales commission you'll likely have to pay when you sell it, either don't buy it at all or buy it but don't over-improve it.



   
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