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It’s one thing to renovate your apartment or brownstone when you will be enjoying the results. But what about when the reno is solely to make your property more appealing to buyers—and bump up the the asking price? How much should you renovate before you sell?
The answer depends on several factors. For starters, you need to consider the type of property you are selling, the condition it’s in, and how much you’re able to spend.
What’s more, raising the sale price isn’t the only end goal; selling quickly is another valid reason to renovate. And rest assured: Some owners decide not to renovate because they don’t want the stress or financial burden.
[Editor's note: An earlier version of this post was published in September 2017. We are presenting it again with updated information for September 2019.]
“We don’t typically recommend renovating when selling if you have a $500,000 studio,” says Joel Moss, an associate broker with Warburg Realty who specializes in new developments and resales. That said, she might suggest renovating to someone who is selling a $3,000,000 three bedroom and competing with new luxury condos in the neighborhood. “It varies so much across different situations.”
Assuming renovation makes sense for your situation, “there is definitely a premium in the market for a renovated space,” says Asher Lipman, founder of nycRenovationCoach, which advises New York City homeowners, buyers, and real estate agents on renovation issues. For him the questions you need to weigh to be strategic are: Do you renovate the whole apartment or only the kitchen and/or bathroom(s)? Do you do just a basic remodel or go for broke?
Read on for more intel regarding how much—or how little—renovation work you should do before selling.
The potential pay-off
As a seller, you have to think about how much you can add to the sales price by renovating. That might mean getting back dollar-for-dollar (or more) what you put into the upgrade—something Moss and Lipman say can certainly happen in higher-end sales.
For an idea of what a renovation might do to your asking price, look at comparable sales in the area and check out price histories on sites like StreetEasy. Compare recent sales of as-is versus renovated properties. Your broker should also be aware of the market, so work together to come up with a plan that makes sense for your situation.
A faster sale
Even when a renovation fails to increase the final sale price, it can certainly move an apartment faster. That in itself can save you money in carrying costs, plus properties that sit on the market tend to appear stale—or worse, like there’s something wrong with it. “Everyone is on StreetEasy and if they see anything that’s listed for more than 90 to 100 days they think it must be overpriced,” says Lipman.
Beating the competition
Again, it’s about knowing what other properties you are up against. In today’s slow market, being proactive about marketability is often the name of the game.
Know that we are not talking about a gut renovation of your entire home. Unless you have a luxury property, you will not be recouping that level of investment. Instead, kitchens and bathroom renovations will give you the most bank for your buck.
Need proof? Consider how your kitchen and bathrooms will photograph. If they’re not attractive—and unless buyers want a serious reno project on their hands—they’ll skip your listing.
But you don’t have the option of not showing them in listing photos. Buyers are wary when there are no images of the kitchen and at least one bathroom. “To me, that’s a red flag that signals I’m obviously going to need to renovate,” says Lipman.
Adding another bedroom may backfire
If you’re thinking of doing a reno to squeeze another bedroom into your apartment, (something Lipman encounters all the time), consider it carefully. You may very well end up boosting the price but need to brush up on the requirements for a legal bedroom in NYC. Is the length or width of the room less than 8 feet? No dice. And you will be required to get a new certificate of occupancy (not a simple process). “A well-laid-out one bedroom will sell for more than a choppy two bedroom,” says Lipman. “Only embark on this level of renovation for your own use.”
Fixing major issues seals the deal
Any single-family houses with habitability or structural issues—a hole in the roof, a broken-down boiler, or a cracked foundation—must be renovated for a buyer to be able to obtain a mortgage. (Cash buyers don’t need a mortgage, which means a bank isn’t going to send an inspector over, but you’re limiting yourself to a smaller pool of buyers. And a cash buyer can always hire their own inspector.)
Consider the stress factor
"You could bifurcate this discussion into the emotional toll and the financial burden of the renovation," says Lipman.
First of all, a renovation is a major undertaking. “For some reason people think it’s harder or more revolting to renovate an apartment that hasn’t been touched in 50 years as opposed to one that was renovated in the ’80s, but it’s really the exact same process,” says Lipman.
That means you may want to avoid undergoing the inevitable stress and strain of renovation if there are any personal issues—say, you’re retiring or someone has died—even if you recognize you might be leaving money on the table.
“Living in the space while renovating adds a whole other level of complexity,” says Lipmen. You can move around a kitchen by eating out, and deal without one of the bathrooms, but you’ll have to empty the apartment to replace the floors. Factor that into your equation. Ask yourself how much you (and your family) is willing to endure.
Unsure how much time and money you should invest in updating your place before you sell—or want to test the waters "as is" before publicly listing it? Consider discreetly "pre-marketing" your co-op, condo or brownstone. The pre-marketing platform at New York City brokerage Triplemint is a no-risk way to quietly test your asking price and marketing strategy among actual buyers shopping for a place like yours. There's no charge to participate and no obligation to sell or enter a traditional listing agreement if you haven't found a buyer by the end of the pre-marketing period. To learn more, click here. >>
Timing is not your friend
Timing is also a factor, what with the requisite co-op or board approvals and also building code permits. So it depends on how quickly you want to put your place on the market. “We can usually whittle down the construction time, but the outside factors have a bigger influence on the timeline,” says Lipman.
There’s also the financial burden of renovating. “The first thing that I look at is the marketability of the unit and the expectations,” says Lipman.
If you are selling a starter or mid-range apartment, it usually makes sense to do at least a basic upgrade. Because the cost of the pre-sale renovation is baked into the purchase, it is effectively financeable by first-time buyers or anyone who is stretching to afford the purchase. Your listing will be attractive to buyers who are not in a position to do a renovation after buying, so you will arguably be expanding your market.
The same thinking applies for someone buying in a co-op or condo where there are stringent rules that could make renovation a nightmare, so buyers would arguably be willing to pay a premium for your own sprucing-up.
Appeal to a wide audience
Renovating for anyone other than yourself is tricky. There’s plenty of advice telling you to go with only the most neutral upgrades to attract the broadest audience, otherwise that ornate kitchen backsplash or ultra-modern bathroom vanity will be a dealbreaker.
Lipman, who works with a lot of condos and co-op owners in Manhattan, agrees that over-the-top modifications could make an apartment harder to sell, but also suggests avoiding some of the most well-trodden paths in design, like being too bland.
“It’s all-too-common for someone who is looking at a renovated apartment to say, ‘Why did they do the boring white kitchen? If I’m going to change it anyway, why would I pay for it?’” That’s why Lipman cautions against a generic renovation.
Not that you should confuse timeless with humdrum. “Stainless steel appliances and subway tiles are always in fashion,” says Moss.
The key for Lipman is to do things that are out of the box and offer buyers some added value. For example, you could add put toe-kick drawers in the few inches between the bottoms of cabinets and the floor. Instead of marble or granite, man-made materials like Soapstone are more popular for being easy to clean and maintain.
Appeal to those who don't want to renovate
“If you are smart about the renovation, that might be enough to convince buyers to close on the deal, even if they plan to eventually rip it out and do it all over again,” he says.
There are just as many buyers who will see value in not ever having to deal with the boards and the logistics and finding contractors, so long as the space is clean and functional.
“New Yorkers are more willing to live with (and pay for) a thoughtful renovation,” says Lipman.
Do a cost-benefit analysis in a slow market
Here’s the real clincher: How much should you spend on your renovation? “This is a tough question because you need to know your market,” says Jennifer Morris, principle of interior design studio JMorris Design. “If it’s hot you can get away with less effort, but if it’s sluggish you have do the math on how much you hope to gain from updates and the cost of those updates.”
Case in point: Morris had a client whose brownstone was “terribly dated and brought the entire house down in value.” After investing over $100,000 in high-end fixtures and appliances, it sold immediately. “She had owned the home for over 10 years so was already doubling her investment, so this expense made sense.”
Lipman has had clients who were willing to spend $30,000 on a kitchen and get $50,000 on the sale price, while others decide (justifiably) to only do the minimum.
After all, “a good-enough renovation might put you over the hurdle of buyers who simply can’t envision living with a really dated ’70s bathroom,” says Lipman.
In that same scenario, you could renovate a dated kitchen inexpensively just by changing the surfaces, putting in a new undermount sink and faucet, painting the cabinets, and swapping in new hardware. “It shows completely differently.” That’s a huge value-add.
Remember that renovating is not your only option. “Staging your property can go a long way,” says Morris. “Assume a budget of at least $10,000 in NYC for this.”
Like most brokers, Moss is also a huge proponent of staging, saying there are a lot of small things sellers can do to make a huge difference. Absolutely make all the small repairs and clean thoroughly. “Wash the windows too, they should be a little sparkly.”
If your floors are in bad shape, Moss says to consider having them refinished. Painting everywhere of course has to happen, though she stops short of replacing the countertops. “You’re presenting the apartment in its best light, as is.” (She’s even sold apartments with white appliances—“which went out of style in the ’90s.”)
Factoring your reno into the price
When trying to figure out whether or how much to raise the asking price, consult your broker, who will know the comps. It might be worth selling it in a week for a slightly lower (but still profitable) figure than to hold out for a higher offer. It’s a buyer’s market, and there’s a lot of unsold inventory.
And should you ultimately forego doing any renovations, you’ll just need to drop the asking price accordingly—and market it as a great fixer-upper.
Previous versions of this post contained reporting and writing by Nathan Tempey.
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