Last Saturday when I went to visit my parents there was this show on TV featuring a young couple who were selling their house and buying another. There was a lot of drama and the couple was doing it all wrong.
They were renovating their house so that it would sell for more and at the same time they were looking at homes that they would need to renovate to live in.
I have a couple of problems with that scenario. Homeowners need to know that renovations cost money and for major remodels the return on the dollar is less than 100%, in fact, 60% is a more realistic expectation.
The couple in the story on TV “had to have” a certain amount for the home they were selling so that they could buy another home. They planned on getting that amount by renovating their home. That would work if the renovations were free. Maybe they are free on TV but in real life they cost money.
As for buying a home and renovating it that usually only makes sense if the home needs work and can be purchased for an amount that is below the value of the home plus the cost of rehabbing it.
The buyers on the TV show were looking at expensive homes that did not need any work but that the couple would need to add onto and re-arrange so that they could have the perfect floor plan.
That means that by the time they paid for the house and the renovations they would have more money in the house than they could get out of it. The best way to get more money for a house is by making smaller improvements and repairs.
The smarter thing to find a house that is close to perfect and doesn’t need renovations and to get used to the idea that there is no such thing as the perfect house. It is more cost effective to buy the home with enough space rather than adding to a smaller home.
Being able to sell a home for as much or more than was paid for it gives homeowners more flexibility and more choices.
The real estate agent in the show is a wealthy man. I can understand why.
Reality isn’t like reality TV. Real home buyers and sellers will need to adjust their expectations if their ideas are coming from TV shows where actors pretend to buy and sell real estate.