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The Honolulu Advertiser
Posted on: Thursday, June 29, 2006

If upgrade's not cost-effective, it's better to lower your price

By Greg Wiles
Advertiser Columnist

For the Western U.S., the National Association of Realtors, in conjunction with Remodeling magazine, found good returns for some bathroom remodeling. An alternative to remodeling is "staging" a home.


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Q. I'm considering selling my home and wonder if I should do some remodeling. But I was wondering whether it is smarter to sell as-is and save myself the ordeal of a home improvement project.

A. There's no simple answer to this because many variables are involved, including where you live and what buyers expect in that area. There are other factors to be considered, including whether it will help you sell your home faster in O'ahu's slowing real estate market.

The National Association of Realtors has looked at this issue annually over the past several years, comparing costs and potential return for projects. The good news is that, in general, remodeling projects in the Western U.S. generally provide a better return than elsewhere in the country.

The association, in conjunction with Remodeling magazine, found good returns for some kitchen and bathroom remodeling, along with additions of attic bedrooms. For example, a minor remodeling of a kitchen in which cabinet doors are replaced and a new range and a sink and faucet installed returned 112 percent of the money invested.

The association added a caveat to its report, saying that the cost of remodeling can vary greatly depending on the area and that neglecting problems in other parts of the house could affect returns.

Kay Osman, principal broker of Del Osman Realty Inc., said she sometimes advises people to lower the price rather than risk doing a renovation that won't bring a return.

"If the client will not be able to get at least 60 percent of the money back that they invest, I advise them to do a minimum of things," Osman said. At the very least, the home needs to be clean and appear well-kept, she said.

There are other ways to affect home prices, some of which are less costly than the $15,328 kitchen project mentioned above. The so-called "staging" of homes placed on the market is beginning to crop up locally. Whether remodeling or staging, it's best to get your real estate agent's thoughts on what needs to be done and how to do it.

Staging of homes involves presenting homes in a showcase manner that will appeal to the most number of buyers. While upscale properties are most often staged in Hawai'i, lower-priced properties are increasingly receiving the treatment, said Honolulu-based home stagers.

"With so much inventory in the market right now, any opportunity to set your home apart from all the others is definitely worth it," said Linh Lien, founder of Hawaii Home Staging.

Lien and other home stagers offers a range of service. For several hundred dollars she'll consult and provide a detailed report for homeowners. More comprehensive services that include bringing in furniture, art and accessories can cost $2,500 or more.

People who want to know more about staging might consider buying the book "Home Staging," by Barb Schwarz, a Concord, Calif.-resident considered one of the pioneers of the business.

Schwarz's Web site, StagedHomes.com, gives statistics it compiled showing that staged homes sell faster and command a higher price. Independent findings at HomeGain .com, a real estate site, show many of the actions suggested by home stagers, such as removing clutter and brightening interiors, can provide returns that often exceed what's invested.

"Three basic things are considered when buying or selling properties: location, price and condition," wrote Charene Davis, head of Aloha Staged Homes and one of the first in Hawai'i to the earn Accredited Staging Professional designation.

"Staging affects the condition of the property, and could affect the price when the perceived value is high."

Davis and Lien said many of their clients are Realtors. Sometimes Realtors shoulder the costs and are reimbursed in escrow; other times the Realtor and seller split the costs.

Got a question?

Do you have a question about personal finance, taxes or other money matters? Reach Akamai Money columnist Greg Wiles at 525-8088 or gwiles@honoluluadvertiser.com

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