Author: Vivian S. Toy
To improve their Riverside Drive one-bedroom, the owners put in a new kitchen and bathroom, refinished floors and painted. Asking price: $529,000. Suzanne DeChillo/The New York Times
September 6, 2009
Spending to Sell
By VIVIAN S. TOY
MANY buyers today — unsure whether prices have gone as low as they will go — aren’t looking for just a good deal. They’re looking for a steal.
For sellers, that means that to create even the slightest frisson to lure in buyers, they must either price their homes at distressingly low prices or present a property that is in turnkey condition.
Even if real estate values have started to level off, most buyers are still intent on paying rock-bottom prices. And once they have bought a place for a song, they are in no mood to spend a penny on remodeling. They want to do nothing more than unpack a toothbrush and move right in.
This means, of course, that any apartment with a 1980s renovation or more than slightly worn countertops is destined for intense scrutiny and many weeks on the market.
Some sellers are making the bold move of renovating their homes to sell them. Brokers say that this strategy can help keep the price out of the basement, and more important, help the home sell much more quickly.
When Renée Fishman, an agent with Halstead Property, first laid eyes on Rik Morris’s two-bedroom apartment at 7 East 14th Street, the rooms were cluttered, the bathrooms were dated and the kitchen was “unsightly, to say the least — it was a little scary.”
Mr. Morris inherited the place last year from an aunt who had lived there for nearly 20 years and used the kitchen so rarely that she had the gas turned off ages ago. Ms. Fishman warned Mr. Morris that “no one in this market wants an apartment that has great potential, but is in original condition, because nobody wants to do the work.”
Mr. Morris, a private investor who lives with his partner, Jim Kelleher, in Philadelphia, resolved to fix up the place. “Otherwise, we didn’t think we would ever get what I considered a reasonable offer,” he said. “But I also wanted to make it so that if we didn’t sell it, we would want to move into it ourselves.”
Six months and $147,000 later, they put the apartment on the market for $1.275 million. It had an expanded kitchen, new bathrooms, a new office area, a 42-inch plasma television, new doorways, refinished floors and freshly painted walls.
The men outfitted the place with contemporary furniture and used it briefly as a pied-à-terre. Three weeks after it went on the market, it sold, going into contract close to the asking price, TV included, in late July.
“I wanted people to walk in and feel like they were walking into my home, not a unit that had just been painted and polished,” Mr. Morris said. “I’m not surprised at how quickly it sold, because we weren’t selling a fixer-upper — we were selling a finished product.”
Ms. Fishman said that in its original condition, Mr. Morris would have been lucky to get $900,000, so she is sure that he recouped his investment.
“Buyers loved what they did to the place,” she said. “There’s no question it made it 100 percent easier to sell.”
A search of listings in recent weeks produced several sellers who went well beyond clearing out clutter, deciding to pour thousands of dollars into renovating their homes before putting out a for-sale sign. The improvements ranged from refacing cabinets and installing new appliances to gut renovations of kitchens and bathrooms.
Some of the owners suspect they may lose money when they finally sell, but they are united in the conviction that the wait will be shorter than it would have been without the renovations.
Carroll Gardens Two-Bedroom
Meagan and Eric Newhart knew they would have to redo the kitchen before putting their two-bedroom apartment in Brooklyn on the market. The cabinets were dated, and they were using a pair of pliers to turn on the dishwasher.
Their agent, Heather McMaster, a vice president at the Corcoran Group, initially wasn’t so sure. “Why do a renovation when somebody might not like it?” she said. “But they’re buyers themselves, and they felt it would move more quickly if it was priced well and didn’t need anything.”
The couple are interested in a house in Westchester County.
The Newharts bought their Carroll Gardens co-op at 161 President Street two years ago for $599,000 and can imagine losing money on it, as they have just put it on the market for $625,000. The kitchen renovation, new dishwasher and all, cost about $20,000.
Living through the project with their son, Zachary, 2, was not easy. Ms. Newhart and Zachary stayed at a friend’s house during the day, but they went home to sleep. “We did it because we wanted to make the apartment as marketable as possible,” she said.
Hamilton Heights Town House
Emilio Frederick II and his brother, Malcolm, inherited a town house at 413 West 154th Street from their mother late last year. The top-floor apartment, where a cousin now lives, was in fairly good shape, but the rest of the house needed work.
Their mother had run a day care center on the ground floor. The brothers decided to present that floor as raw space. Then they turned their attention to the parlor and third floors.
“We didn’t want to spend more than $30,000,” Emilio Frederick said, “but I thought it was very important to update the kitchen and get the carpentry done.”
The duplex still had original fireplaces as well as woodwork, much of it buried beneath decades of paint. So to bring back its 19th-century glory, the brothers had all the woodwork stripped and refinished.
The kitchen harked back to the 1980s, so they replaced the white laminate with granite counters and hardwood cherry cabinets, and bought stainless-steel appliances. They also reglazed bathtubs and installed a vanity in one of the bathrooms. The work cost about $25,000.
“After the renovations were complete,” Emilio Frederick said, “it was heartbreaking to put it on the market, because I would love to live in that house.” Both men live in Maryland, though, and relocation is not an option.
Their broker, Doug Booth, an agent with Barak Realty, listed the house for $1.45 million last November, before the renovations were under way. Since late March, they have been able to market it with photographs of the renovated interior.
“Before the work was done, I was making apologies for it,” Mr. Booth said. “But it’s a magnificent house, and it deserves to be shown without apologies.”
Mr. Booth is not too concerned about the property’s time on the market because a steady stream of potential buyers has come through.
“Obviously we would have liked this to have sold on the first day,” he said, “but it’s a very slow town house market right now. The people who are looking at town houses are either people who normally wouldn’t be able to buy a town house at all, or they’re looking for extreme bargains. And this house, we feel, is priced just right.”
Brian Lewis, an executive vice president at Halstead Property, represents a brother and sister who are also trying to sell a home that they recently inherited. Their father, who died last year, left them a four-bedroom five-bath apartment at 135 East 54th Street that had been created by combining a studio with two apartments.
Neither sibling lives in New York and both felt the space was too big to consider keeping as a pied-à-terre. But before they put it on the market, they decided to make it the showcase they knew it could be. They spent more than $100,000 to renovate and expand the kitchen, redo the master bath, refinish all the floors, and stage the place with rented furniture.
Perhaps the most eye-catching work was the redesign of the foyer. They opened up the space and installed new lighting to create a gallery that announces that you have entered a gracious four-bedroom apartment, not a four-bedroom warren haphazardly created by combining units. They put the place on the market three months ago for $1.995 million.
Mr. Lewis was pleased that the siblings made the investment.
He said that when the market was strong, it was rare to see executors put money into an estate sale. “In a seller’s market, the audience is hungry,” he said. “But now buyers don’t want to dig into their pockets and do the work, unless it’s in a hot, hot area that is impermeable to the market.”
Upper West Side One-Bedroom
Mariya Slonim and her husband, Vlad Rysin, listed their one-bedroom apartment at 214 Riverside Drive for $499,000 in May 2008. Their brokers, Alan Nickman and Stephen O’Neal, both executive vice presidents at Bellmarc Realty, knew it would be a hard sell.
The couple had planned on renovating, but put it off because they also wanted to combine the one-bedroom with an adjacent one-bedroom. But before they could put this plan into action, they left the city to work in Russia.
Mr. O’Neal described the bathroom as having “1980s brown Formica that was looks-like-wood ugly.”
After a year on the market and several offers that fell through, Mr. Nickman told the sellers, “People can’t see this apartment for other than what it is, and the market is not on your side.” He and Mr. O’Neal urged them to renovate, and the couple agreed.
They put in a new kitchen and a new bathroom, refinished the floors and painted the walls in different colors with a faux stucco finish. The tab was about $60,000.
They listed the apartment again in late July for $529,000. Since then, their agents report, open houses have been busy.
“They didn’t renovate the way a sponsor renovates,” Mr. Nickman said. “They did it as if they were going to move back into it.”
But Ms. Slonim had her reasons. “I wanted it to look nice, in case it did not sell and we would decide to keep it for another few years instead,” she said.
Mr. O’Neal said some buyers had confided that the walls weren’t to their taste. “The painting is a little personal to me,” he said. “I think I might have gone with a more neutral finish.”
Mr. Nickman said that he, too, would have recommended a more vanilla palette. “You want what appeals to the largest possible crowd, to make it easiest for people to see themselves living there,” he said. “They did a good job, but it’s to their taste and hopefully it will not be problematic.”