Nancy Tallman

Why would anyone selling a home consider spending money on it? A renovated kitchen adds value to a home and makes it more attractive to buyers. Notice—I did not say that it makes a home “worth more money.” Statistics compiled by the National Association of Realtors show that the average kitchen renovation takes two years to complete and has a return on investment of about 68.76%.

So why do it?

In today’s competitive seller’s marketplace, many buyers will simply pass on an outdated kitchen.

If you are considering a kitchen remodel for the sake of improving your home’s sale potential, it’s a good idea to share your plans with a real estate professional. The kitchen pictured here belongs to one of my clients.

This was a pre-sale renovation that we discussed. This home was sold the first week it went on the market.

You have to be smart about it.

If your home will be priced under $1M, you can save money by skipping the professional grade appliances. If your home will be priced over $2M, I think it would be a mistake to install anything other than professional grade appliances.

Install a good quality and neutral granite counter-top. Buyers can see right through the pre-fab counter-tops with the half-inch trim. You don’t need to go overboard on high priced granite unless you are planning to stay in the home to enjoy it.

If cabinets are high quality wood, they can be refaced and/or repainted.

High quality hardware and new paint are inexpensive and easy upgrades that have a high impact.

So, is a kitchen remodel worth it? If you want your home to stand out as being the best value in its price point, then it can be worth it. You just have to know what you are doing and not over- or under-improve for your price point.

I was at a brunch last weekend in a very high end part of town. I was speaking with one of the other guests and when he found out I was a real estate agent, he told me "I have too much equity in my house." I looked at him kind of puzzeled because I thought that was the goal in today's market. He explained that if he didn't have so much money tied up in his expensive primary residence he would not have to work as much and he would also have money to invest in today's real estate market where prices and terms are very attractive.

It got me thinking about lots of different things--like

1.) We never know if the owner of the dream home that we admire is actually a financial prisoner of his house;

2.) I personally aspire to have a home that is paid for. But at what point does someone have so much money tied up in a primary residence that it's "too much" of their equity or net worth?

3.) Is the fact that people have equity in their homes that they are unable to tap into (as in years past) preventing a lot of "would be" investors from getting into the market?

4.) This gentleman (and I am sure there are many like him) is a prospective seller. He wants to sell his house to unlock his equity.

Your thoughts????

Last Saturday, thirty sellers participated in a real estate auction in the Park City area. Sellers had to pay up to $5,000 as a marketing fee to the auction company and the buyer of each property had to pay a 2% "auction premium", which is essentially the auction company's commission. Both listing and buyer's agents commissions were consistent whatever was in the listing agreement. The cash deposit was used by the auction company to pay for internet and local/national print advertising.

The auction took place in a large conference room at a nice hotel. Appetizers, punch, lemonade and water were served and a cash bar was available. There were about 100 people in the room when the auction began. More than half were local realtors who accompanied or represented clients or were there as observers. About 30% of the people in the room were sellers. Another 15% were employees of the auction company or title officers who were on hand to close transactions. Only about 5% of the attendees were buyers.

More than half of the homes had bids and "sold". Most of those bids were received prior to the auction and were either at or below the minimum bid. Almost all the bids were the sole bid for the property. Only 4 of the homes were offered as "Absolute". The rest of the offerings allowed the seller 5 days to consider the offer and that's why I put quotes around the word "sold". The bids were so low that I wonder if the sellers will try to negotiate them up or try again with the traditional system.

In my opinion, if the properties in the auction were posted on the MLS at the minimum bid price, they would have had a good chance of selling without the buyer and seller having to pay the extra fees. In addition, each listing agent had to sit open houses for a minimum of two weeks before the auction to give potential buyers an opportunty to view the listing.

At the end of the day, I sat two 3-hour open houses, coached my clients on the auction process, attended the auction, and we are back where we started. The only "benefit" is that my sellers have a sober view of the resort real estate market and may be willing to be more creative in their quest to sell their property.

Would I recommend my clients participate in this type of auction again? I doubt it.

Mr. Seller is upside down on his house. He realizes that he can buy another house in the same neighborhood for the new "reset" value, which in Park City is about 30% below the peak. Mr. Seller becomes Mr. Buyer of a nicer house than he currently lives in and his mortgage is about 40% below his last mortgage because of course, he was overleveraged. Once Mr. Seller (now Mr. Buyer) is moved into house #2, he walks away from house #1. He has a new mortgage at a stellar 30-year fixed rate so he doesn't care that his credit is ruined for 7 years.

I heard about this new tactic and didn't think it would really effect me until....a local bank decided that my preapproved buyers, who are NOT upside down on their current home...are a "high risk" for this tactic. Even though we have their current house listed for sale on the MLS, their loan for their move up house is "stuck in underwriting".

Just when many of us were exhaling a sigh of relief that the real estate market is picking up, the banks are throwing a new curveball at us.

Every year my husband, Larry, and I travel to a quiet place and write our goals for the coming year. About a month prior to this "meeting" I start thinking about what I want to focus on for the coming year. This year, 2010, is going to be all about simplifying. We are in Sundance, Utah today. This resort is the manifestation of Robert Redford's dream and vision about a sustainable resort that promotes the arts, nature and incredible dining. The resort IS simplicity and an example of what happens when the focus is on just a couple of things done extremely well. It is always inspiring to be here and the perfect place for reflection. We checked in last night and there are always in room magizines focusing on organic and natural living. It was KISMET! The magazine "Natural Home" (a magazine I would normally never pick up) was called "The Simplicity Issue" and was dedicated to "paring down and living more". I loved the article about the guy in Iowa who built a 140 sq foot house and how it changed his life for the better. He lost weight, improved his career and met the woman of his dreams. It reminded me of when I lived on a sailboat for a few years in the early 1990's. Those were some of the best times in my life--even though my corporate management position forced me to wear a business suit on most days. Here is the quote from "Natural Home's" editor that I am going to use as my inspiration for 2010 "When we clear away the physical and mental clutter that gums up our lives, we can focus our energy and resources on what really matters: friends, family, activities we are passionate about. Letting go of commitments and stuff we don't really care about is a gift greater than gold--and an ability worth cultivating." There you have it. When Larry and I sit down this morning to pen this year's goals, I am going to look at that quote and adjust my goals accordingly.