Remodel Dilemma Selling Your Crested Butte Home

Remodel Dilemma Selling Your Crested Butte Home

Remodel dilemma selling your Crested Butte home, I just spent quite a bit of time advising a potential client on the value of their home. The unfortunate dilemma for the Seller is that the home is in need of a significant number of repairs, but the seller “just wants to sell their Crested Butte home”.

They do not want to spend the money, time and effort to do the remodel work needed…

I get the opportunity to work with both sellers and buyers –
so you get the benefit of me sharing my knowledge with you
(so you can make informed decisions).

It takes quite a bit of energy and commitment to take on a large home remodel project. And remodel projects make most people tired and weary just thinking about the process and timeline.

It is also human nature to be excited about a project you will be enjoying for years to come – but if you are a seller you are leaving. Adios. See Ya. Turn the Page… and so it is understandable that a seller does not want to “fix stuff”. It feels like money down the drain.

So, if a Seller is thinking that it is too much of a hassle and probably way too expensive to spend their money on their own home – what do you suppose most Buyers are thinking?

A Buyer’s Perspective on a Crested Butte Home Remodel Starts with Fear

When a Buyer knows that there is money needed to be spent on a remodel they are fearful. They will factor in the known cost for the remodel, AND the unknown costs… And this cost is likely to be more than double the estimated cost. Plus they will add their time and effort to take on the project.

There is a real financial risk to a buyer and they are fearful.

The Buyer wonders what will be found when a contractor rips into a wall, or goes to do something simple like replace a window?

Simple Window Replacement – Not

It is very likely there may be some old rotten wood, and instead of a simple window replacement there will need to be a new window frame set to accept the new window. And in order to do the carpentry work to put in the new window there will need to be drywall removed. And then the drywall will need to be repaired, and re-painted. And due to the paint fading over time, the paint color touch-up won’t match exactly, so the whole room will need to be repainted…. And so on.

The buyer is not being unreasonable when they submit a “low-ball” offer to the seller – they are being realistic from their perspective.

What is the Typical Reaction of the Seller toward the Risk-Taking Buyer?

The Seller’s Math is different. The Seller is only looking at the rest of the market and estimating their Selling Price.  Seller’s are usually “offended” by the Buyer’s offers on homes that need work. Usually the Buyer has done the math, and the seller is not wanting to address the elephant in the room.

Most Buyers who are willing to entertain a home that is “a project” will be perceived as “sharks in the water” to the seller.

So, the Buyer may take a shot and send an offer to the Seller. It will add up like this for the Buyer.

The Buyer’s Math

The cost of the home + the remodel cost + the overage fudge factor + the Fear and additional risk it will be more + their Buyer’s time and effort to oversee the project + the carrying cost for the time the Buyer will own the home but can’t yet enjoy it (because it is filled with workers and under construction)…

The reluctant buyer who chooses not to make an offer will usually frustrate the seller for their “lack of adventure”.

How does the Story End for the Seller?

The Seller will either win the lottery, or the market forces will convince them that they are overpriced.

It will take a while, and sometimes they will shoot the messenger (their real estate agent). Eventually they will reluctantly agree to price reductions until finally a buyer arrives who is a risk taker and submits that “low-ball” offer that the seller reluctantly accepts.

The Inspection and the Objection

There will be a professional Inspection done on the home. The Inspection will reveal more surprise “issues” that were unknown to both parties at the time of the Contract.

The Buyer will go back and do The Buyer Math again (using the same formula as before). Then the Buyer will submit an Inspection Objection to the Seller demanding that the Seller remedy these surprise issues or provide a reduction in the agreed to price (or a credit at closing), else the Buyer will terminate.

Since the Seller is now privy to this new information in the Inspection Report they must fix this stuff, and reveal this in their Seller Property Disclosure to any future buyers. So, they can either deal with Buyer #1 now, or kick the can down the road.

The Seller calculates their carrying costs, the thought of starting over… and they come to terms with the Buyer with some concession so the deal will close and they can be done, and they can turn the page…

Deferred Maintenance Required – What is Usually Needed?

Conventional wisdom is that 3% – 5% of the value of the home is necessary on an annual basis for deferred maintenance, upkeep, appliance replacement…etc.

In the Crested Butte area, the exterior of a home is subject to harsh conditions – especially the South and West facing sides of the home.  Delay of needed upkeep will cost more as surfaces are exposed to the elements and start to break down…

Some Typical Parts of a Crested Butte Home That Need Attention

A home built in the early 1990s does not seem like it is “old”. But time flies – and if we do the math we see that yes there are a lot of “relatively new” Crested Butte homes that are more than 25 years old.

Entryway – Front Steps and Porch

I have had Buyers turn around refuse to walk into a home they really wanted to see simply because the first impression was not good. Pay special attention to front steps, porches, front door area and make this a priority. You don’t get a second chance at a first impression.

Windows & Exterior Doors

There are no small expenses in a big home… you can’t just replace one window or exterior door. If one window is failing – there are probably 20 or more that may need to be replaced.

Depending on the type of window construction and the trim work done and the upkeep of the paint – there may also be some deteriorated wood framing and additional carpentry work needed.

Replace Exterior Decks

It is not unusual that exterior decks and deck railings will be in need of significant repair or need to be replaced. It is not uncommon to find exterior decks did not pressure treated wood.

It is also not uncommon to find homes where the roof sheds snow onto a deck area.  This will always be an issue. A neighbor and client of mine recently replaced a sliding glass door to their deck with a picture window and decided to not rebuild the deck – instead adding deck space to another section of the home.

Replace all Soffit and Facia and trim?

Out of sight out of mind. These areas are also referred to as the eves under the roof and left unattended to can become an expensive repair down the road.

Staining and/or Painting

Pay now or pay more later. Exterior Staining or Painting is very necessary – most professional painters in the Crested Butte area make a good living, and are in demand. They are protecting very expensive wood underneath those coats of stain or paint.

Vapor Barrier in Crawlspace

Many homes in the Crested Butte area have water in the crawlspace due to seasonal Springtime run-off.  Others have standing water that may seep in through the foundation (water will find a way) and this requires a pump and vapor barrier to prevent wood from getting rotten or moldy.

Seller’s Who are “Do it Yourselfers”

Some projects are easy – most require a professional. It is easy to spot the project that was not professionally done. This could be an addition to the home, or a “jerry-rigged” home audio/video system with unsightly cables and 9 remotes…  Exposed cables denote complexity and problems.

A New Roof?

So, what is the life expectancy of a roof in harsh winter conditions in the Crested Butte area? Most would say a roof that was installed in the early 90s would last “about” 25-30 years.

Technology Refresh

The flat screen TV has been very common in our homes now for over 15 years. Tube TVs are obsolete and provide a negative connotation to the home for the Buyer. These anchors will cost $50 to $100 each just to throw-out at the Gunnison dump.

Replace the tube TVs with sleek high definition flat screen smart TVs (or with an Apple TV device).

Add a Sonos wireless sound system to the TV Replacement at the same time and create a full-audio experience in the home.

The good news is by mounting the flat screen TVs on the wall, you will find that the large bulky armoires that housed the old TVs can also be removed.  And the side benefit is this provides more space in every room and makes the home feel larger.

A Current Example – 625 Red Mountain Ranch

Estimates put this huge log home construction at well over $7.5M. It sat vacant for 5 years. It is a bank owned property and in need of a fair amount of work. I am not privy to the contract details, but expect it will likely close well below $2M or 25% of current market and/or replacement cost.

Banks are rational sellers of residential real estate.  I have had the opportunity to represent a number of banks. They are not emotional, and because of this they will keep reducing the price every 90 days until the property sells.

A Note to Sellers

I have watched this “Remodel Dilemma Selling Your Crested Butte Home” story play out through the years as I have represented both Sellers and Buyers.

I realize this may not be exactly what you hoped to hear, but probably what you know deep down to be realistic.

My Recommendation for Sellers

Do what I suggest in my Book – The Complete Guide to Selling Your Mountain Dream Home: Eliminate the surprises.

1. Get what I call a “Reverse Inspection” of your home now by a professional Inspector (including Radon Test) to determine what the list of issues are…
2. Then get bids from qualified contractors to determine what the costs would be to repair your home.
3. Have an Appraisal done by a local professional Appraiser.

Get the information so you can make informed decisions.

If you choose to spend the time, effort and money, you will have a project in front of you over the next year (given the competition for contractor’s time in CB right now).

If you choose not to take on this project, I think your market price will be well below what you expect. And your home will likely sit on the market longer than you hoped.

Final Thoughts

Save yourself the anguish of not knowing. I hope you see the level of detail and time and effort I put into this candid article Remodel Dilemma Selling Your Crested Butte Home.  I have become a Top Real Estate Agent in Crested Butte by helping my clients to make informed decisions. Some decisions are not always easy.

This is representative of what you can expect from me as your agent.

If you would like to know my recommended local Inspectors, Appraisers, Contractors – Call me to discuss your specific home.

Thanks,
Chris.

How can I help you?

I have over 30 years of sales and marketing experience and am a top real estate agent in the mountain town of Crested Butte, Colorado representing affluent clients who are buying and selling their homes and properties. To see featured properties or search the MLS – visit chriskopf.com.

How is the Crested Butte Market doing?  Click this link to see my monthly Crested Butte Real Estate Market Reports.

Chris Kopf, Coldwell Banker Bighorn Realty

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Remodel Dilemma Selling Your Crested Butte Home