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As many of you know, I have a spec house that I’ve been trying to sell for some time. Have been debating about whether or not I should finish it.
More in first post…
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As many of you know, I have a spec house that I’ve been trying to sell for some time. Have been debating about whether or not I should finish it.
More in first post…
Learn how discussing a budget with clients and narrowing it before reaching a contract can lead to design decisions that won't change the project's scope.
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The house as it currently stands isn't finished. The drywall is finished and primed, electrical rough in complete, furnace hooked up and working, plumbing roughed in but no fixtures, no floor coverings,and no kitchen cabinets.
The reason I left it at this point was that I assumed it would make the most sense for the buyer to pick out their own kitchen, paint colors, electrical and plumbing fixtures, carpet, etc. The house is listed with a realtor to be sold "as is" and finished to the buyers taste. But i also realize that what makes the most sense isn't necessarilly what will work best with the general public.
Yesterday the realtor called me - The big shot owner, not just the sales guy. He says he thinks it will sell much better if it's finished, and wants me to meet with both him and the agent to talk about it.
I'm a little reluctant finish the thing, as the payment on the thing is already quite a burden. I figure it will take about $20,000 more to finish it 100%.
So basically I'm asking you guys who have built and sold spec houses - Do you normally finish them 100%? Or do you leave things for the buyer to pick out, as I have? Which one seems to work best?
*Boss, Spec construction isn't my forte, but in all of my years of conversation with realtors (even the few who's opinions I value), they say that buyers prefer a completely finished house.In this day and age of HGTV and DIYers roaming the aisles of box stores, you'd think that someone would jump at the opportunity of an unfinished house.Apparently not so.Your house is more unfinished than most. I could see the electrical and plumbing scaring off a few buyers. Most unfinished houses around here simply need paint and carpeting...you'd think a buyer would jump at the chance to choose their own and earn a bit of sweat equity...but many balk even with just paint and carpeting.
*Just a guess and my own opinion here. I've never done a spec (but would like to some day).The feeling I get is that peole who are willing and able to put in sweat equity are those that buy an older house to fix up. New Houses cost more (cuz...well they're new). People buying new houses are paying top dollar for this "newness" and aren't as likly to be the sweat equity types.Much depends on your market. If you trust your agent and broker, they will have the best info on your area. It may not be a bad idea to finish it up. Don't put high end fixtures in it. basic white paint to not offened anyone's tases in their first impression, etc... If all else fails you could at least rent it to cover your ass with the monthly payments until it sells. Right now I'm off to look at an 80yr old fixer-upper for myself! Good luck, and wish me luck!
*Boss,I'm in a similar position, though the house I'm trying to sell is in a partially remodelled condition. It's still not easy to predict what a buyer would want.What I think is most people don't want to worry about finishing a house. Most people stink at it too. But most people want to buy a finished house.So, I look for the most bang for the buck-something that's fairly inexpensive but looks expensive, say the bargain 12" ceramic tiles for under a buck at HD--you can install a large area economically and it looks great.I think for sure, you've got to finish the electrical, plumbing, cabinets, floors and trim. If someone wanted to do all that, they'd either build new or buy an underpriced "fixer" and remodel with their own skills.If selling fast is what you have in mind, consider what the local taste runs to, and finish with those details in mind. Don't go high end on carpet or wood floors or anything if it's a lower end house. Don't go cheap if it's high end. But if the house is being finished, it can still be sold, and you can adjust the price and finished product if a buyer happens onto it while in progress.guess you've thought of all this, just needed some reinforcement?MD
*> guess you've thought of all this, just needed some reinforcement?Not sure I need "reinforcement". I'm just thinking that I've been looking at it too logically, and thinking more like I would think if I was buying a house. Or maybe looking at things more like I i thinkother people look at them.There was one other reason I haven't finished it, that I didn't mention - I was partially counting on prospective buyers to understimate how much they think it would cost to finish the house. This has turned out to be partially true - Several people have told me they figured I could finish it for $15,000. I'm virtually certain that it will be around $20,000, unless you go really cheap on the kitchen and carpet. But that idea hasn't helped sell the house.
*Not sure how big it is. I'm building a 3500 sq. ft. house for a client that will finish it himself-all floors, trim, cabinets.I'm allowing him $26,000 within the bid just to BUY the materials to do this with. That includes no plumbing, lighting, paint. And I consider it to be a pretty meager amount to accomplish all of this.Does that help?
*The house I'm trying to part company with is fairly simple, and 1680 square feet. Nothing out of the ordinary.
*BossI have not expertise or background to say this. But I agree with the general trend. If the people wanted a custom home they would build one.And it is too late to do the mod's, such as adding a fireplace or moving a patio door, that they could do if they bought a new trac house from the builders model house.At this point most people are going to want to see a "finished" house that they can kick the tires on. Cabinets, tile and hardwood where appropriate. Walls primed so that they looked finished. But leave the carpet and paint for them to select.
*My experience with home sales is that, as with most things, people are in general not all that creative. We all want to think that we are above the average, but that is just not mathematicaly possible.My experience with this is that unless everything is as clean and bland as possible you will turn off almost all prospective buyers.They call that souless, light tan carpet color "Realator Beige" for a good reason - it moves houses.The comments above about customers of new houses also rings true - not the most imaginative lot in my mind. They want to eat a Bennagins no matter where in the world they have gone, they are made happy by simple stuff that does not challenge. Look at how well the Camry has sold in this country in the last 5 years and it is a totally dull product when you get right down to it and be critical (and I work for the company!).I like old houses and challenge, yet I drive a Camry, so this life we live is sure messy sometimes...
*First let me say that heavy drinking would probably be more efficient use of my time - this site gets in the blood and too easy to click over to see what is happening.Regarding your excellent question: I'll likely just echo what you've been hearing. Read an article within last month (don't know where) that interest in buying fixer-uppers is waning as is the desire to gain equity through sweat equity. Article insinuated it was a generational thing: Younger generation (sometimes referred to as "McQuick") want it all right now and are willing to work to pay for it. I see it in my two kids yet at home (13 & 17). They both work after school (because their wants far exceed parents' budget), get good grades, and even now talk about the outrageous homes and cars they want. My 13 year old son even has the number of bathrooms picked out. Perhaps they've eaten too much drywall dust over the years.There must be a lesson here - just like coke - see lots of people drinking it then better buy the stock.Beige, white, off-white have been the "safe" colors when selling a home for as long as I can remember. Buyers apparently don't like seeing another personality in the home - apparently like to see the blank canvas. Makes it easier to envision themselves and their stuff in the home - so I understand.Couple years ago circumstances dictated that I sell a fixer-upper that I hadn't finished. There was little interest and I took a hit on it. Realtor, whoI know, had forewarned me. Said that not much interest in these type homes as even those starting out want them finished. I had been moving along so fast in my own little world that I got passed by - good lesson. I live in semi-rural area where sweat equity has been way of life for most. If happening here, imagine attitude is well established in metro areas. Is the writing on the wall or is it just a glitch?Based on my kids and their friends - finished is going to get the most interest. Geez, I should have said that first and saved all this typing. Good luck.Some thoughts - Randy
*> I live in semi-rural area where sweat equity has been way of life for most.Same here. Thanks for your thoughts.
*I remember reading that often times furnishings and art on the walls help sell a house, that the "blank slate" feel of an unfurnished house is intimidating to many people. If that's true, by extension it must also be true that the closer a house is to finished, the better the chance someone will want to buy it. Our society is evolving past the point that the average person wants to finish their own home, even if they do have the skill. We are getting more specialized in our professions and the average person would rather ply their own trade for 40 hours, play golf on the weekend, and pay you and me to ply our trade to provide them with shelter and creature comforts. It used to be, every home had a fruit tree or two, right? Mama canned vegetables from the garden and fruit from that tree(s) so the family would have fruit through the winter, right? Sew a patch on the knees of Dad's work pants? Not very often. Darn those holes in the kid's socks or knit them mittins? Not these days, much. Dad have skills required to build, or even finish his own house? Dwindling rapidly before our eyes.We (at least I am) are so far from the ability to provide basics like food and shelter for ourselves it's pitiful. I don't think it's progress, by any means.
*My nephew built a house several years ago and it had been for sale since then.The only hang up was the house had no closets. Without the closets no one would offer close to what he wanted. When he added the closets, the house sold.Hiring someone to do the finish work is a lot of work. It raises issues of why the person who did the rough work is not finishing the work.Perhaps you could start finishng the house (least expensive most time consuming parts first), and sell it completed. A lot of spec houses are sold that way around here. The contractor finds a buyer and has a contract in hand to finish the house before the owners move in. This would give the buyers the oportunity to make the decisions they want to make, relieve them of the responsibility of finding contractors, and give you some cash to finish the house (I think that 10-20k in your pocket would help your cash flow.)
*I've worked on a lot of spec houses and they are always completed 100 percent. That's what the consumer is looking for a completed house.
*I'm not sure I understood, are you saying there will be $20,000 and that you will finish the house or that the buyer will need to come up with an additional $20,000 and finish it themselves?Most people buy more than they can really afford so they probably don't have the $20,000 to finish it, or the skills. They're thinking down payment and monthly payments. And if they have the cash, they'd rather be out on their boat or the golf course!steve
*Steve - The house is done to the point I outlined in my first post. It is for sale through a realtor at a set price "as is". I think it will take an additional $20,000 to finish out completely. I figure they could borrow the money to finish it along with the money to purchase the house, and put it into a mortgage.
*Boss, ALthough my area of experience is buying, rehab and renting homes I have sold a few. What I have found is most people like to watch fix it tv, but few really want to do it. Most want a turn key deal and worry about the blinds and curtains. Also I have found only about a third of buyers have the ability to envision the final product so they are lost as to what it might look like completed. I vote with the others, it will sell better finished. DanT
*For what it's worth: Most people buy the max they can afford right now, knowing that they eventually make more money and the payment gets easier. The bank they finance through wants a house they can sell tomorrow in default. Seems to me you are shooting yourself in the foot by compounding the buyers lack of vision, and the banks unwillingness to lend. It's a small house, I'd throw in some oak and neutral colors and get rid of it. $20,000 seems way high to me, for work you would be doing yourself I presume. An unfinished spec house........you guys kill me, what can we think of next. Did you guys talk him into this at one of the "Fests" after a long day of drinking games?
*You know, Keith, I started this thread to ask some opinions on what people thought of a difficult situation for me, and look for some reasonable advice. Your smart-assed answer did absolutely nothing to help the situation. Just pissed me of. Spec houses sell around here all the time before they're finished. I know of at least 3 in the same subdivision that sold before the roof was even on the dang things. And how would b youknow if $20,000 is too high? you haven't even seen the house.
*Boss, finish it. the best way you know how. it will sell faster if it is done. Besides if you dont some moron will take advantage of your eagerness to sell (trust me it will show) they will want purple carpet. you will do it. then they will demand many extras. later they will back out, leaving you with the purple carpet. i've had worse, more later. see ya leigh
*Leigh - Thanks for the input. Based on the advice here and from the realtor, I'm leaning towards doing that. As for the purple carpet - I was hoping to sell it "as is" and let them pick out their own stuff after closing. That way I don't have to worry about someone doing exactly what you've described.
*Boss, we do specs every year, usually 2 or 3. We have sold them before the roofs are on too.BUT, in every case, from the outset it was my intention to finish them regardless if someone wants them before they are done or not. I don't drag my feet, I want to get them to market as quick as possible. I also don't bottom feed on someone underestimating finishing costs so I can reap in more. This is a friggin TINY house by todays standards. Starter at best. How much of the expensive stuff could you possibly put in 1600 sq/ft? Smart assed or not, if you don't have the tolerance for a little ribbing, then I'm quite sure you don't have the nerves for the spec home market. You need deep pockets, and be willing to sit on one for a few years ,as most who have done it for any time has. If you have to finance one(and most had to at some point when starting)I'm sorry. We do them from working capital, so if we have to let them sit, that a payment isn't due. Sorry, should have just suggested to finish the house.
*Keith - O.K., maybe I should have been a litle thicker skinned. Your post just hit me wrong. I didn't realize you had actually built specs - You're the kind of person I had actually directed the question at anyway. I actually like "ribbing", but thought you were making more of a personal attack than anything. As for "bottom feeding" by guessing that buyers would underestimate the cost to finish - That was more an afterthought than anything. It wasn't my intention from the start, I just thought it might help sell the thing. As for selling them before the roofs are on - Your intent is to finish the thing to completion, just turning it from a spec to a contract. The ones I've seen sell that way were just sold "as is" and left for the buyer to finish. Maybe that's your preference, or a regional thing. As for financing - It's 100% financed except for about $10,000 of my own money. So the interest/mortgage payments payments suck. As for the size - Yes it isn't a lot more than a starter home. But I tried to build quality into it rather than make it big and cheap. (Like everyone else does around here) And for a small rural town, the big ones just don't sell well or hold their value. You questioned cost to finish- Here's how I see it breaking down:Wiring 700Electrical fixtures 1,200Kitchen cabinets 6,000Bath cabinet 1,200Plumbing 2,000Paint & labor 1,200Floor coverings 5,000Trim 1,000Dishwasher 600Shelving & bath accessories 500Misc 500Total: 19,900I think you may be right when you say that I don't have the nerve for the spec home market - It just isn't worth the hassles it's been. I doubt I'll ever try another one. A man's gotta know his limitations.
*Thought I would bump in and unload my two cents worth. I build a number of spec and model homes each year in developments and would recommend to always take it to the finished level. You would have a hard time as a buyer in getting appraisals that can cover the necessary work to be completed in a initial appraisal and would have to turn around and get a second mortgage and burden the cost of whole new closing and fees. I haven't seen much of a sweat equity buyer for a long long time in my parts.But as far as the finish areas left for you, I have most of that work on consignment deals with the designers, Audio Visual, and various trades and make my arrangements to promote their interests whenever the spec is shown and make it available for their clients as a trade in kind deal.I normally will only carry about 50% of the tag on any spec home and plan to carry it no longer than 12 months and change in the 8-9 month to sell it if required. I see most go in month or two unless I hit the bottom or top of the range in the area/development.
*Boss Hog:As a real estate agent & spec house builder (my first)I would strongly suggest that you complete the home. My experience is that new home buyers want a new, complete, worry free, finished product. My market here in Philly is filled with older homes and maybe this makes the new home buyers seem so different from the average buyer.The point Keith made about financing is very important. Mortgage companies and appraisers look at unfinished homes about the same way they look at dilapidated homes i.e. they need $$$ pumped into them to approach market value.Listen to your Realtor, and finish the product. It will attract more buyers that way. More buyers = more chances of a sale.Good luck.
*Boss, talk to the realtor, find out what the people in your area want, and finish the house accordingly. Go to HD or some other discount outlet and get the cabinets for less than 1/2 of what you budgeted, laminate tops, SS sink. Keep it off the shelf and basic. Vanitiy cabs...$500 max for all. Carpet and vinyl allowance...for the whole house should be no more than $15.00/yd installed. You'll get the carpet houses "bread and butter line". Looks nice is inexpensive, and you'll get it for 1/2 your budget. This is the way (in my opinion) to build entry specs. My name is on my houses, but I am not an ego builder, nor do I build specs as monuments to "ME". I do good quality work, charge fair prices, and make good money. The people that are buying the specs realize that they are not buying a custom home, and they are not paying my custom price either. I know a guy, real good friend, that had an idealistic view if his homes. He built his first spec " the right way" in his opinion. On borrowed money, priced 20k higher than anything in the development. He sat on it for 2-1/2 years and lost 40K by the time it sold. He now bad mouths specs something fierce. His sat so long, people began to think something was wrong with it(there wasn't, it was a damn well built home, very nice)but word spread and this one may have well been haunted. No short cut for good market research, give them what they want, at the price that will sell fast. I hate realtors as much if not more that lawyers, but they are valuable for more than ballast when the time comes. Before I even buy the lot, I consult the realtor as to what they can move the fastest, let them be the customer(to a point, a very small and managed point)the rest is just going thru the motions. Again, sorry to have pissed in your cereal this morning.
*Keith - Thanks for the input. Don't know if I can stomach going to one of the big boxes for cabinets. I have long time customers who sell cabinets, and I think it would be an affront to them to do that. I ended up buying material from 3 different lumberyards for that reason. For carpet, I had figured $25 a yard just as a budget, with 10% waste. You're probably right that I'm a bit high. I don't think I'll "bad mouth" specs - I just don't think I'll do one again. (Just like Evel Kenievel said he'd never jump again about 10 times, right?) I'm really good at some things, but the business end of stuff isn't on that list. If I do it again it would have to be done differently. Maybe with a partner or something. I never wanted the house to be some sort of monument, but I really wanted it to be a nicer house than what's typically available around here. Most of the specs in this town are put up by people with poor reputations who build fast and cheap. I've done trusses on several of their houses, and have seen some pretty stupid things done. Kinda irritates me - Their houses are snapped up like crazy, and I can't sell mine. We do have a "Plan B" out there. I told DW if it didn't sell by the end of school, we're moving into it. If we gotta pay the mortgage on the durn thing anyway, we might as well live in it. Thanks again for your input...............
*I'm not a spec house expert, but I would have to say that the house would show must better to buyers finished. People usually buy a house and plan to make changes over the next few years, so going with light colors and a basic finish out allows your purchasers to move in right away and live there for a few years until they are ready to change a few things up.Also, most people don't have a clue regarding completing a house, such as how much, how long, etc... Rather than gamble on finishing your house, they'll go down the street and buy one of those cheaper homes from a competitor. Then over the next few years, the changes can be made (paint, flooring, landscaping are the most popular).The other thing most "craftmen" find frustrating is that, generally speaking, most home buyers assume that the hidden structure of a house is similar from one to another. They don't know or seem to care that builder XYZ cuts every corner he/she possibly can get away with. They only know that your house (in which you DIDN'T cut those corners) is $4,000 more. Buyers of real estate, especially "starter" homes are very price sensitive. Its an unfortunate fact of residential real estate that the signage for subdivisions are almost always reads "Generic name here, homes from the $140s"Anyway, that my opinion, good luck with your house. Daqvid