Major upgrades might not be worthwhile, expert says

In today's lethargic real estate market, making some minor home upgrades might give frustrated sellers a competitive edge.

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But real estate agents warn breaking the bank on a major overhaul may not pay off in the end.

It doesn't make sense for a seller to embark on that large remodeling project he's always wanted to do right before selling, said real estate agent John Wake, with HomeSmart in Scottsdale.

It's better to drop the price of the home because the goal is to get out, Wake said.

"There's a really strong tendency to put too much money in a house to get it to sell," he said.

If parts of the home have already been remodeled, the owner may want to bring the rest of it up to date in some cases, Wake said.

But there are effective, less expensive, ways to spruce up a home's appearance.

Real estate agents say new paint and carpeting are two of the easiest and most cost effective ways to improve a house. Getting rid of clutter to make the house look larger is also key.

Older homes could benefit from new light fixtures. New kitchen cabinets and appliances also make a difference, Wake said.

Another simple upgrade is improving the landscaping.

Owners can trim back trees or remove bushes that obscure the front door, Wake said. Owners often don't know what types of plants or colors to use, so it's worth the money to bring in a professional from a local nursery for advice, he said.

"I'll see a million dollar home. The interior is spectacular and the landscaping looks terrible," he said.

But before making any improvements, it's important to look at every house on an individual basis, said Mike Wasmann, 2009 president of the Arizona Association of Realtors.

Look at other homes in the neighborhood, Wasmann said. If a seller has an older home and is competing with homes that have been updated, a little paint might not make a huge difference, he said.

Sellers should get advice from a real estate professional who knows the market and can compare other properties, he said.

Still, a paint job on the outside of a home never hurt, Wasmann said.

"A bad roof and a bad paint job usually stand out like an eyesore," he said.

When it comes to larger home improvement projects, kitchen remodels consistently have higher returns, according to Realtor.org.

A 2007 survey by Remodeling Magazine showed minor kitchen remodels had an 83 percent return in value.

"(Buyers are) looking for bigger kitchens," Wasmann said. "They're looking for bigger master baths."

In some cases, a seller will give the buyer a credit toward making the necessary improvements.

That's not necessarily a bad move, but it's also lazy, Wasmann said. Potential buyers can go look at 15 or 20 homes in the same price range of a home that hasn't had the work done, he said.

And if real estate agents know what's behind the door, they might not bring buyers by the home, Wasmann said.

"Going that extra mile may make the difference in this market," he said.

WILLING TO PAY FOR FEATURES

A 2007 home buyer survey by the National Association of Realtors revealed that buyers are willing to pay more for certain features.

• 56 percent said they would pay more for high-end appliances

• 56 percent would shell out extra for granite (or similar) countertops

• 46 percent would pay more for a kitchen island

• 46 percent would pay more for a deck

• 38 percent would pay extra for professional landscaping

SOURCE: National Association of Realtors