Answering the question “Should I Remodel or Sell?”
You should sell. It’s a great time to be in the market. Take advantage of today’s interest rates and the hot market.
At least, that’s what you want to answer. But the quick answer isn’t always the best one for your potential client. A better solution is to walk through the pros and cons with your client and really let them know that the answer you give is in their best interest. Even if you don’t end up listing that house right now, you’ll be more likely to get referrals – and their business- if you take the time to have a conversation. Here are our thoughts about how to answer, “should we remodel or sell?”
1. “How long are you planning to keep the house?” If they love the neighborhood but hate the bathroom, then a renovation keeps them in the house and neighborhood where they are comfortable. If they need more space because their family is growing and they want a long-term solution, then it’s probably time to go. Find out where they are in life and what’s coming down the pike in the next 5 years.
2. “How much are you planning on doing to the house?” Usually it’s updating flooring, kitchens and baths. Keep a running tally in your head of roughly how much they’re looking at spending. A typical bath remodel of flooring, tub/shower surround, cabinets, paint, sinks, lights and faucets can run between $6000 – $10,000 depending on size and quality of finishes. Kitchens average from $15,000 – $50,000 or more. Installed carpet is typically about $5-7/sf and hardwoods average $8-15/sf. Of course, you’ll want to recommend that they have contractors come give them more accurate quotes, but you’ll have a general idea of how much money they will need to spend to get the house they want. If they start talking about moving a lot of walls, plumbing, or adding on then unless they are absolutely in love with their location, it’s probably time to start looking for something else.
3. “How much equity do you have in the house?” If your client has a lot of equity in the house, then it opens up more financing options for them to pay for the remodel. They could consider a home equity line of credit or home equity loan. Interest on these loans is tax-deductible like a mortgage so it takes the sting out of the bills a little. Alternatively, if the client doesn’t have much equity, they may end up putting themselves underwater. Granted, in this market they likely wouldn’t stay underwater too long, but you don’t want to be the one to give them the advice to remodel when it’s financially a poor decision if they’re planning to sell soon anyway.
4. “Are you willing to put up with construction mess for 3, 6, or 12 months? Because no matter how long you think it should take, it will take longer.
5. “What do you think your house would sell for as it is? What would it sell for if you updated a little? And what would it sell for if you completely remodeled? Finally, what would your budget be if you bought new? Would that budget get you what you want?” This part of the conversation probably involves running comps and means a follow-up conversation. Never a bad thing.
Take the time to engage in a longer, meaningful conversation with your client and you’ll create a foundation of trust with your client that will lead you to more business. Don’t dread the question. Consider it your lucky day. If they’re asking, then they’re already feeling like the house they have no longer suits their needs. And that means they’re probably going to end up selling. Even if they don’t sell, you’ve already established yourself as a trusted resource that they’re more likely to refer to their friends.