Real Estate Question - What would you do?

[willtel]

I have had enough of my current neighborhood and have decided to sell my house and move on despite the poor market conditions.

I bought my house during the boom and paid $180000 for a two bedroom 1.5 bath on a slab in the city of Atlanta. My house was built by a custom home builder that normally made homes in the $1 million + range, they bought some lots in an up and coming part of Atlanta and built 8 craftsman style homes on the same street. They are all similar but no two are exactly alike.

My house was the first one built and it was marketed with the upstairs living space unfinished. My real estate agent told me this was done to get buyers into the area and then they would perhaps buy one of the larger fully finished homes on the street or buy mine and request that the upstairs be finished before closing. Because things were tight for me I bought as it sat and planned to finish the rest of the living space on my own. The other houses on my street sold for between $220000-$240000 and then the bottom fell out.

I have done a tremendous amount of work upstairs but it isn't finished yet. It was all studded out and electrical and plumbing rough-in was done when I moved in. I have almost completed all the drywall work, carpeted the two bedrooms, trimmed windows and hung doors, and added a quality heating and air system. All that is left is finishing the stairwell, flooring in the hall and bathrooms, adding fixtures to the bathrooms and caulk and paint.

My dilemma at this point is that any further time and money I spend will be lost when and if I sell. I need to pay the loan down to about $160000 before I feel it will be worthwhile to list it and I would guess I have about $5000 more to spend upstairs and maybe 100 hours of my labor to complete it. As it sits I could list it as a 4 bedroom 1.5 bath because both of the upstairs bedrooms and required closets are complete.

Should I list it as is or keep burning cash and time and finish everything out before listing?

[IROC]

It seems that a big part of the answer to your question is "what will the house sell for now?". That - seems to me - would be the one factor guiding a lot of your decisions. Putting the $5k and labor into finishing the upstairs might not get you any ROI, but I bet would make the house much easier to sell.

I've bought and sold four houses in the last 8 years (two in Alabama and two in TN) and the one thing that I found is that in this buyers market, everything on the house has to be absolutely perfect and even then they are going to beat you to death. To me, it's almost like owning a Porsche - don't look at the receipts, just enjoy the car. In your situation, I would get out of where you're at and into where you want to be and don't fret the $$ because most likely it won't be pretty.

[stomachmonkey]

Originally Posted by IROC

..... but I bet would make the house much easier to sell.

......the one thing that I found is that in this buyers market, everything on the house has to be absolutely perfect and even then they are going to beat you to death....

This.

Last house I sold in NY I repainted top to bottom, had the floor grout redone, new carpet everywhere. The carpet was the cheapest stuff I could find that looked like it cost more than it did.

It made a huge difference.

The problem with a house that needs work is realtors will use it to sell a different house.

They will show your house at $100,000 needing $25,000 in work then take them to a house selling for $130,000 that needs little to no work.

Either that or they will offer you less than asking price plus less what they estimate the finish work will cost.

Getting top dollar will be easier if you remove as many negotiating points as possible.

Good luck.

Nice looking house BTW.

Has good curb appeal.

[Rot 911]

I agree with the above posters. Buyers of houses don't want to do any work on the house. They want it move in ready.

[Zeke]

Any time you can spend with a low cost factor should be done. I think that's obvious. Do the painting in an off white. I don't know what you mean by finishing the stair well. No handrail or finish stair treads? Will they carpet out instead of hardwood. Can you do stairs? Lots of unknowns here.

Fixtures probably need to be in place. You can get a toilet and pedestal sink both for around 300 plus hook ups. If the shower needs a door, throw a curtain up.

You could do a floor allowance for the hall and bath out of escrow, or however your system works. Keep it minimum. They can add cash and upgrade. Either way, they get to choose the new floors and make the house their own. I would make an issue of this.

[madmmac]

I have found it is hard to sell/market a 2 bedroom home.

[BRPORSCHE]

That is a beautiful home. Transplant it to Houston and I would be in the market! I love craftsman homes.

[willtel]

Originally Posted by Zeke

Any time you can spend with a low cost factor should be done. I think that's obvious. Do the painting in an off white. I don't know what you mean by finishing the stair well. No handrail or finish stair treads? Will they carpet out instead of hardwood. Can you do stairs? Lots of unknowns here.

Fixtures probably need to be in place. You can get a toilet and pedestal sink both for around 300 plus hook ups. If the shower needs a door, throw a curtain up.

You could do a floor allowance for the hall and bath out of escrow, or however your system works. Keep it minimum. They can add cash and upgrade. Either way, they get to choose the new floors and make the house their own. I would make an issue of this.

The stairwell is pretty bare. The treads are the cheapest thing you can get, wooden but something that would be used to get down to a basement, not to be seen in a finished space. There was a temporary banister to get it to pass the initial inspection but I took it down so I could get the drywall upstairs. The landing and hallway at the top are bare sub-floors. I'll get some pics.

It seems the consensus is to finish it all out. That stings because I'm just giving all that time and money away but I suppose it is what it is. I am also the type of person that likes to do something once and do it right. It pains me to lay linoleum when i would prefer tile but I guess I need to get past that and do what it takes to get it on the market with the least money spent.

Yesterday I spent $8000 I had saved for my 930 engine rebuild towards the mortgage to get it closer to a legitimate sale price. That hurt... It will be years before she sees the road again.

[kaisen]

If you sell it "as-is" you're really limiting your market. You want as many people as possible in the potential buyer pool.

Think of it in car terms:

"1987 Porsche 930. White/Black. 88K miles. New Michelins. Freshened motor, almost installed, just needs wiring harness reconnected and minor misc. Should run fantastic!$37K"

OR

"1987 Porsche 930. White/Black. 88K miles. New Michelins. Fresh motor. Runs fantastic! $39K"

[Jim Bremner]

that would sell for 600k in a decent zipcode in so-cal on a 5,500 sq ft lot. I would finish it to let it sell quicker.

[Jim Richards]

I agree with IROC and stomachmonkey on this.

[HardDrive]

Absolutely finish it.

A) The market is soft, and you are turning away a huge number of potential buyers by having an incomplete house.

B) Its sounds like you 'want' to sell, as opposed to 'need'. If you can stick it out another 6-12 months, I think there is going to be a bit more wind in the RE markets sails.

Damn nice looking house. Whats wrong with the neighborhood?

[Groesbeck Hurricane]

How much to get the bathrooms upstairs finished and paint ready and rooms paint ready?

I am not in the business but it would seem to me that in order to move on out the home would have to be close to move-in ready. I can see maybe the rooms needing paint and flooring. But if they are not ready for the end finish then you will really limit your market and limit your ability to sell.


FWIW your home has nice curb apeal. You need to have nice front door apeal.

When we looked at homes we did not mind having to do some fixing up. We looked at alot of homes! You would walk in and see large portions of homes unfinished. The work was ALWAYS substandard and missing braces, nails, screws, etc. If the walls had been covered with sheetrock it would have been harder for us to detect. We ALWAYS estimated what the house would be worth AFTER repairs/fixes and the costs of completing the repairs/fixes. We then looked at the asking prices on the homes. They were almost always near the value of the home AFTER the work was done. Only one home was appropriately priced and we bought it. Still, after three years, completing repairs and updates.


Would you be in a position to provide a cash payment to buyers at closing for cost of paint and flooring? If they negotiate the price down you can take down the cash payment as part of the negotiation. This tactic will turn some people off.

[willtel]

Originally Posted by HardDrive

Absolutely finish it.

B) Its sounds like you 'want' to sell, as opposed to 'need'. If you can stick it out another 6-12 months, I think there is going to be a bit more wind in the RE markets sails.

I need to sell it. I will have to wait six months or so to get things in the right financial shape but the longer I wait the worse things seem to get. Values keep dropping and sales are not picking up. Everyone says the bottom is coming but I can't see if for the downward spiral we are in.

Originally Posted by HardDrive

Damn nice looking house. Whats wrong with the neighborhood?

In short, it is in Atlanta. My zip code has more section 8 housing than the rest of the state and those properties and their tenants keep values depressed because they have nothing invested in the neighborhood.

Code enforcement is absolutely non-exsistent and the city government that runs it is corrupt. My house is 5 miles from the Governor's mansion and that crap doesn't fly in his neighborhood but it is the norm in mine. I am just tired of getting my property stolen (car was broken into last week for the 4th time) and I refuse to raise my seven month old daughter in this situation. I pay higher property taxes than the rest of the state and get worse city services for it. Water bills are the highest in the nation. The public school system here is getting national media attention because teachers and administrators held "cheating parties" to correct wrong answers on exams to get more funding. I won't be a part of it and need to move on. I don't mind high taxes and expensive government as long as the services I receive are stellar. They aren't and I am over it.

[tevake]

Try to think of it this way. The 5K and time you put into finishing it will save you having to deal with the 25/30K drop in offering price that you will otherwise get.
Clearly worth the effort. It is a tough time in the market to be selling. If you can sell quickly you will then be a buyer in down market. then it works to your advantage.

Cheers Richard

[RANDY P]

Lender won't touch it incomplete- they'll want it finished prior to closing.

[Zeke]

I agree with tevake and RANDY. But, take your time. The bottom is here, IMHO and we're bouncing along on it. The climb will take forever to appear, but it will eventually. Get the house in order and be patient. You know how sales work. Someone somewhere wants that house. Get in too much of a hurry and you'll never connect with that person.

[aigel]

I don't think things are going to get better any time soon, as in rising home prices. If interest rates start going up again with the economy improving, houses will stay at the same price or less, as monthly mortgage payments are going up.

That said, I am with everyone else here - you should finish before sale. It never is easy working on something you know you aren't going to keep, but just keep chipping away at it and install neutral and medium price materials.

Two times in my automotive ownership have I fixed head gaskets on high mileage trucks only to sell them. With a bad head gasket they were $1500 vehicles. With a new gasket, running great, they were $4000 trucks. I just got in the mode where I knew that my time was worth about $100/h and did it. And yes, on a V8 I only did one side - so you are allowed to take some shortcuts.

George

[Evans, Marv]

Agree with everybody else. One thing that came to mind in your description was the 4 bedroom, 1 1/2 bath comment. The first thing that entered my mind was, "What, 4 bedrooms and only 1 1/2 bath?" To me a 4 bedroom house should have at least 2 full baths+. I think it might sell just as well of you turned one bedroom in a likely location into a den or study. Then it wouldn't strike people (at least the way I think) as being less deficient in bathroom availability. Then market it as having the den/study available as another potential bedroom if needed. Just my $.02.

[rnln]

willtel, beautiful home, but sorry to hear your situation. Sounds like you should get out of there. If you can fix it up (quick), it will be easier to sell and you can get more out of it. Selling it the way it is, most people will trash your price. Everyone is expecting to pay a lot less if there is anything undone.
Good luck.