Graham Wood is Executive Editor of Digital Media for REALTOR® Magazine. He can be reached at email@example.com.
How Older Homes Can Gain an Edge
When dated properties are surrounded by new construction, the selling challenges can be daunting.
May - June
The 4,200-square-foot lakefront property Mark Parrish listed last August seemed like any home buyer’s dream. Twenty minutes outside of Minneapolis, it was more spacious than most comparable homes in the neighborhood, with four bedrooms and four baths, and had unobstructed water views. Though the basement was unfinished and the kitchen needed some updates—the cherry wood cabinetry and flooring had fallen out of fashion—Parrish felt confident the home’s attributes would overshadow its weaknesses. Still, it took eight months and about 20 showings for his sellers to get their first offer in March—and it was $45,000 below the $629,900 asking price. In a market where homes in good condition generally sell quickly, the sellers, relieved to have found a buyer, accepted the offer.
It would be easy to blame a seasonal slowdown in the market for the languishing sale. But Parrish, GRI, a sales associate at Lakes Sotheby’s International Realty in Edina, Minn., says the sale became more challenging because of a development of about 200 newly constructed homes a couple of blocks away. The properties in the brand-new community reflected the latest styles in flooring, lighting, and countertops, among other items. And that made the outdated look of his sellers’ home, built in 2004, even more noticeable to buyers, Parrish says. “People are blinded by the white plank floors, gold light fixtures, and quartz countertops you often see in new construction,” Parrish adds. “If buyers look online at your listing and see dated cherry cabinets and flooring, and they go to the next house and see white marble—if you’re not willing to make that change, it will be reflected in your price.”
Though a home’s design and style is not always a make-or-break issue for the sale, most buyers likely will factor it into their purchase decision, especially when choosing between resale and new construction. When you help sellers in areas with alluring, newer units nearby, you’ll be battling a common perception that existing homes aren’t as desirable as new ones—even if your listing is in pristine condition. So it’s wise to help sellers modernize their home’s look to make it more competitive.
Small upgrades, such as adding a fresh coat of paint, switching out old kitchen and door hardware, or incorporating aesthetic details specific to your region, can give listings a newer feel, says Josh McNair, broker-owner of Geist Realty in Indianapolis. But big-ticket items, such as energy-efficient appliances, new countertops, and bathroom remodels, may be the most important upgrades sellers can make because most buyers can’t afford them on top of a home purchase, adds Terrylynn Fisher, CRS, GRI, a professional stager and associate broker with Dudum Real Estate Group in Walnut Creek, Calif. Sellers also can add smart-home features that enable owners to control thermostats, lighting, and door locks from their smartphone to draw buyers’ interest, since those amenities are becoming standard in new developments.
Not all sellers, though, are willing or able to pay thousands of dollars for improvements. In that case, lowering the list price may be the best way to gain an edge over newer homes. “Everyone knows you pay a premium for new,” says Christine Rae, founder of the Certified Staging Professionals International Business Training Academy. “You pay not just for the property itself but also the developer’s costs and marketing investment. So new generally means more expensive.” And that could be the most important factor in a budget-conscious buyer’s decision-making process.
Still, don’t underestimate the impact aesthetics can have on the value of both resale homes and new construction. Here are some top considerations for marketing older homes in areas where sparkling newcomers are springing up around them.
Investment in curb—and backyard—appeal. Many sellers have added amenities, such as pools, decks, and porches, and worked with professional landscapers, painters, and contractors to make the look of their home more upscale, Fisher says. This means buyers won’t have to spend extra money on these items. Developers of new homes, on the other hand, often make a barebones investment in curb appeal to control costs, she adds. “Buyers sometimes have to landscape the backyard and add window treatments, which can give them sticker shock.” These extra costs may include planting grass or laying sod as well as planting trees and other shrubbery.
Better lifestyle options. Many resale homes are closer to schools, shopping, restaurants, and public transportation, which is a big plus, McNair says. “New construction usually takes place on the outskirts of town, where agricultural land is being developed into housing subdivisions,” he adds. Clients who strive to live in a neighborhood with a certain feel may find more options in existing communities with a developed sense of community.
Individual charm. “Older properties usually have character that is lacking in new builds,” Rae says. Many resale homes have historical features and flourishes that add extra appeal, as well as more mature trees and larger lots that offer more privacy. New homes tend to be built closer together on smaller lots, where “your neighbors are looking into your yard,” Rae adds. Construction shortcuts sometimes result in flaws that come to light after the owner moves in. Much of the time, adds Fisher, “You’re going to have a more substantial house in an older home because it’s had owners that have cared for it.
No customization options. Buyers may have to compromise more on a resale home, McNair says, because major details such as floor plan, lot size, and interior finishes often can’t be changed. And if they can, it will require a sizable investment. With new homes, however, buyers can work with the builder to customize these options before and during construction. Customization may come with added costs, McNair points out, but it likely won’t be as expensive as doing a major remodel on an existing property.
Difficulty retrofitting green features. Demand for eco-friendly homes is growing quickly, and features such as energy-efficient appliances, HVAC and electrical systems, and windows are becoming standard buyer expectations. While more developers are including these items in their builds, many resale homes may not be able to be outfitted with entirely new systems, Rae says. So buyers who are looking for ways to lower their utility bills may find better options in newer communities. Another benefit: New-home buyers won’t have to worry about wiping a previous owner’s data from a smart product.
Stale design. Some sellers won’t keep the style of their home current. Despite the best advice from their real estate professional, these sellers won’t remove dated carpeting or add fresh details such as new ceiling fixtures, kitchen backsplash, countertops, hardware, and bathtub glazing, Rae says. While an incoming buyer can fix these issues, it’s a burden. New homes, by contrast, hew more closely to trends and won’t require cleaning up a previous owner’s design disaster, Rae adds.
Executive Editor of Digital Media