Home Buying in Denver>Question Details

annp, Home Buyer in Parker, CO

How much in upgrades before pricing out of the neighborhood?

Asked by annp, Parker, CO Thu Feb 28, 2013

Wow, this whole house hunting process is quite daunting. After the builder I was interested in raised prices (with 2 days notice) and told me about a "prime lot fee" for lots that were nothing special, I have decided to refocus my search and look for existing homes.

In general, and I know this goes by neighborhood and is very specific, but how much money in upgrades would be too much for a house that will be sold in 5-10 years? For example, if I'm planning to buy a house around $300K, and other sales in the neighborhood are around that mark as well, what is the maximum amount of upgrades and work that should be put into it to make it an attractive resale, but not too out of range with the neighborhood?

Thanks in advance!

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Robert McGuire’s answer
Annp,

Good question. And good answers below. It all depends on the neighborhood and also the comfort level you want to have while you are living there. Some neighborhoods have gone up 10% and more over the last year. The Denver average was about 8%. If you figure on half of that and also the level of comfort and convenience you will have in the meantime it is hard to go wrong putting in some nice upgrades. Most prognosticators are saying we have hit bottom and the values should go up considerably in the next few years as they did in the early 90's. Again you will enjoy the home and your improvements will be a big plus whenever you decide to sell. If you decide to go back to a builder or purchase a resale, be sure and hire a Buyer's Agent to assist you in the process.

Robert McGuire ASR
Realtor/Consultant
Your Castle Real Estate
Direct - 303-669-1246
http://about.me/robertmcguire33
0 votes Thank Flag Link Sat Mar 2, 2013
If you want to not over indulge look at the homes in the area that have been updated. Some times people go overboard by choice because they know the enjoyment they will get out of the upgrades. If you do this you may not get back what you put in financially.
0 votes Thank Flag Link Tue Apr 30, 2013
HI Ann - I totally depends on what the comps in the neighborhood are doing, you never want to go over in value of what homes are selling for. Feel free to reach out to me, I dont mind comping a property for you to let you know how much would be "too much" to put into a particular home.

Julie Bloch Burton - Broker Associate, Realtor®
Brixton Real Estate - http://brixtonassociates.com/
Cell Phone: 970.396.7435 | Fax: 720-306-2397
email: julieb@Brixtonmail.com
0 votes Thank Flag Link Sat Mar 23, 2013
Professional crystal-ball readers predict appreciation in the 1% to 2% range for the future. So this might provide some monetary guidance. For example, at 1% annual appreciation for 10 years, that's roughly $31,000; at 2% for 10 years, that's roughly $66,000.

As important as the dollar amount is where you spend those dollars. Kitchens and baths are key.

Additionally, there is the value of improvements that you yourself can enjoy while there.

All this aside, you may be putting the cart in front of the horse, as you're speculating about a property you have yet to buy and an uncertain time at which to sell.

After all, the house you end up buying may need little if any work at all.

Good luck! You'll know the right house after looking at lots of them. And when you see it, move fast!

Ken Miller
Kentwood City Properties
303-810-5535
0 votes Thank Flag Link Thu Feb 28, 2013
I agree with Marina Bay. It really is more of a neighborhood question and how is that neighborhood trending? Denver proper and its neighborhoods have seen some pretty sweet price appreciation in the past twelve months ~ and in 2013 Im seeing homes in the $350-400k price range going for $10-25k OVER asking price (again, certain neighborhoods. Specifically I have seen this in Highlands and Congress Park).

So find a broker with whom you feel comfortable, and check out the some of the higher priced homes in your desired area to get a sense of what will work for you. Bottom line is this ~ it is still your home and you want to enjoy it while you are in it as well as hopefully have some future appreciation. I would say the low inventory is only going to continue to raise prices so since interest rates are still low, get prequalified and start looking. Best wishes!!
0 votes Thank Flag Link Thu Feb 28, 2013
Hello Ann P,

The question of upgrades and costs is really something that is on an a case by case basis per home and does not really have much to do with the neighborhood alone. Most sellers who just run to Home Depot or Lowe's and buy fixtures etc without first consulting a seasoned real estate broker often purchase items that do not help the value of your home. This is a great reason to contact a very experienced Broker who understands renovation and upgrades and has some appraisal background.

The issues of how much money you invest can have an impact on how much you expect to net with the sale of your home and this also depends on the amount owed the lender. So when you factor in your payoff, and the average resale of homes in your area, against what it costs YOU to possibly upgrade, you can have a better opinion of what it may be worth to spend. Do not spend hard earned money on upgrades until you get that free consultation with a professional who knows what works and what does not!
0 votes Thank Flag Link Thu Feb 28, 2013
I am sure that you will find the responses posted helpful, I sure did. If you have settled on a neighborhood one suggestion is to look for homes that may not have extensive upgrades. The thinking is this, could be a long range rehab project. Certainly you want to be comfortable in your new home. If you decide to move in five years then in four years you start the upgrade process. I have extensive experience in the rehab business and I always put high dollars into the Kitchen. Good Luck to you.

Kevin Connolly
Verde Denver Real Estate.
720-334-6181
0 votes Thank Flag Link Thu Feb 28, 2013
Ann,

It sounds as if you don't have a realtor helping you with the current process with the new build and they just added the lot fee on, so sorry. You might want to get someone to help you as they would know the questions to ask and help you!

With regards to upgrades, you get the most return for your money in Kitchen and Bathroom. Flooring is important to certain people and the trend seems to be to hardwood flooring. It really is hard to predict where buyers taste will be in 5-10 years, but Kitchens and Bathroom have always been the hot buttons!

Hope this helps, feel free to reach me with any other questions!

Bill Pearson GRI, SRES |"Your Denver Realtor For Life"
ERA Herman Group Real Estate| 201 Columbine Street| Suite 301| Denver CO 80206
720-329-1470 |Bill@DenverRealtorForLife.com
5280 Magazine FIVE STAR Real Estate Professional – 2010, 2011, 2012
0 votes Thank Flag Link Thu Feb 28, 2013
I recommend visiting the nicest homes currently for sale in the neighborhood you are interested in, while making this type of decision. This will give you a good idea of what amount types of upgrades are the most popular there. In general I am seeing very similar upgrades in homes throughout Denver metro - open floor plans, high ceilings, recessed lighting, large windows, french doors leading to an outdoor space, hardwood floors (dark stain if the space has high ceilings), chocolate brown kitchen cabinets with light granite counter tops, grey and brown rectangular tile in the bathrooms, etc. The amount of money you spend on upgrades will vary depending on many factors - what contractors will charge, how much you pay for materials and the general scope of your remodeling project. You have to set a budget, shop around and determine what's essential and what you can leave out. General rule of thumb is to keep in mind, that construction projects always cost more and take longer than you anticipate.

Marina Bay
Cherry Creek Properties
303-835-9305
0 votes Thank Flag Link Thu Feb 28, 2013
I definitely agree with the two answers below.
Enjoy the home for you. It's hard to know what upgrades to do today that will pay off in 5-10 years. We do not know what will be considered "outdated" by then.
I have seen some houses where people put a lot of money into certain areas of the home, that don't necessarily help the sale of the home in the long run.
Bottom line: Enjoy the home for you, and for now, don't go overboard on putting a ton of money into fixing everything up. Who knows where the market will be in 5-10 years, I would have a Comparative Market Analysis done on your home when you are starting to consider selling again..
Feel free to contact me if you have any further questions and best of luck!
-Nicole Gilbert
Associate Broker Keller Williams Downtown
720-233-4590
0 votes Thank Flag Link Thu Feb 28, 2013
Some upgrades bring greater return, others do not. Sean is right, find a great Realtor to counsel you. Many upgrades done now will seem dated when you're ready to sell. Find the top valued homes in your neighborhood and do not exceed them in value/upgrades. Good luck!
0 votes Thank Flag Link Thu Feb 28, 2013
What kind of upgrades were you thinking about? Like Julie said, there are the typical upgrades to help increase the value of your home (like the kitchen, bathrooms, etc). It certainly depends on what neighborhood you're looking in, what comprable homes had sold in the area when you're ready to sell, among other factors. Also keep in mind that over-customization may dent your ROI (return on investment) when you're ready to sell.

Send a direct email if you'd be interested in a "market education day" -- i offer this to all my buyers. Would love to chat.

Best,

Stacie
0 votes Thank Flag Link Thu Feb 28, 2013
Good Question!

So many factors involved in the answer! Buyer's like nice kitchens and bathrooms. Granite and hardwood flooring is always a good choice, along with fresh paint. But the amount of money totaly depends on the market at the time you get ready to sell!

Finding the right house to match what you need, to live comfortably over the next 5 to 10 years and still retain the value depends a lot on you and your family. But there are good deals out there and with a good Agent on your side you stand a much better chance of finding the right fit for you.

Knowing that the base price, plus the cost of upgrades, is below the higher priced homes in the area is a good start.
0 votes Thank Flag Link Thu Feb 28, 2013
Hi Ann,

While an exact dollar amount would be nearly impossible to give you, I would suggest letting your conscience be your guide. Any renovation made, should be something you want, need and that you and your family will enjoy. I would stay away from any color schemes or styles on large ticket items such as tile, flooring, granite, etc. that commit the property to a specific look.

Best of luck,

Barbara Grandolfo
0 votes Thank Flag Link Thu Feb 28, 2013
First off, having a great Realtor to help you with this decision, based upon neighborhood, would help you a ton.

That being said, don't forget the value of these upgrades to you, and to your lifestyle. That is an important piece, because sometimes it isn't so much about how much you'll get back out of an upgrade, it's more about how happy you'll be when you're there.

Best of luck!
0 votes Thank Flag Link Thu Feb 28, 2013
Hello
It is very difficult to give an exact amount. It is certainly true that all houses have a maximum limit, that to go beyond would be very to get your money back. Different people's tastes are different too - you could spend a small fortune on a kitchen to have the next Buyer not like the color.

The typical 'upgrades' buyers like to see are kitchens, bathrooms, appliances, granite, flooring, stair rails.

Whilst inventory is down, the chances are they could find a home that already has some of these 'upgrades', unless you find a fixer.

An agent will be able to guide you on the home, its neighborhoods, and suggestions as to what is needed. I tell my Buyer's to enjoy the house for you, not for your next Buyer. 5-10 years time could be a very different style.
0 votes Thank Flag Link Thu Feb 28, 2013
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