Episode summary
Last week we talked about how to price a home. This is the other half of that conversation — because what your house is worth and what you should do to it before listing are not independent questions. Sellers ask us constantly: what updates do I actually need to make? And the honest answer is that it depends on your neighborhood, your buyer, your timeline, and how much of the work you're willing to take on.
We split pre-listing work into two buckets. Defensive is the unglamorous stuff — roof, furnace, water heater, electrical panel, moisture, pests — the things that hold up an appraisal or blow up a deal during inspection. These rarely return dollar-for-dollar (a $30K roof might add $20–25K of value), but that's the wrong way to score them. They're insurance: they widen your buyer pool, keep FHA and VA financing on the table, and stop you from getting hammered on credits after you're already pending. With deals falling out during the inspection period at record highs, that matters more than it did two years ago.
Offensive is the work that makes someone fall in love — exterior paint, landscaping, flooring, kitchen, bathrooms. Here the returns are real but the variance is brutal. A modest kitchen refresh in the Portland market runs about a 115% return. Push the same project into a full gut with new layout, plumbing, and permits and you get roughly half your money back. The highest-ROI items in the whole report aren't glamorous at all: the garage door and the front door.
Plus: the 1997 Fisher's Landing house we use as a running example, why two identical homes at $600K and $585K don't sell at the same speed, why doing the work badly is worse than not doing it, what flippers actually make their money on (hint: the purchase price, not the remodel), why HGTV budgets are fiction, and an honest take on staging — the stats are oversold, but we still won't list an empty home.
Hosted by Nick Aufenkamp and Dave Miller of The Tartan Team, brokered by Real Broker, LLC. Serving Clark County and Southwest Washington.
In this episode
- [01:34] Where this fits: last week was pricing, this week is condition
- [02:44] Why your neighborhood decides what's worth doing
- [04:41] Evergreen Highway vs. Ridgefield — same money, very different returns
- [06:04] Defining "defensive": the repairs that hold up a sale
- [07:10] Why defensive work is really about widening your buyer pool
- [08:08] Deals falling out during inspection are at a record high
- [08:59] Defining "offensive": the work that creates emotional connection
- [13:23] The running example: a 1997 Fisher's Landing home, all original
- [15:27] FHA and VA appraisals — and the roof rule that kills deals
- [19:32] Why we weight defensive work toward surviving inspections
- [20:28] When the new subdivision down the road is your competition
- [23:46] The bummer: defensive fixes rarely return 100%
- [27:34] Two identical homes — $600K with a new roof vs. $585K without
- [28:39] Do it right or don't do it: bad work is worse than none
- [31:44] Offensive: countertops, cabinets, and the tub-shower question
- [33:08] Taste, trends, and the 10% who want the burgundy room
- [36:07] The modest kitchen remodel — and its ~115% return
- [40:02] Go big and it halves: the major-remodel trap
- [40:48] "So why do flippers do it?" — and why HGTV budgets aren't real
- [46:04] Our minimalist approach — and how to not over-landscape
- [48:08] The highest-ROI items: garage door and front door
- [52:27] Using equity or contractor financing to fund the prep
- [53:42] Staging: the stats are oversold, but we never list an empty home
Links from this episode
- Episode 9 — Three Ways to Price a Home: Two of Them Are Traps — the companion episode on pricing
- Zonda Cost vs. Value Report — the ROI guide referenced throughout, with market-by-market data
- Net proceeds calculator — see what a given list price nets you after the work
- How we sell — our listing service tiers
- Book a Strategy Call
Transcript
Lightly edited for readability. Speaker attribution in the fast cold-open banter is approximate; attribution through the substantive walkthrough is reliable.
Nick (00:00): Hey everybody, welcome back to Disclosures with Nick and Dave. I am your host, Nick Aufenkamp, along with my wonderful co-host, David Miller. How's it going, dude?
Dave (00:12): Good. Had a busy couple of weeks here.
Nick (00:16): It has. It's really picked up in good ways. Grateful for that.
Dave (00:22): Yeah, it's something to be grateful for, given that it seems like the local market has swung down a little bit. Days on market are up and inventory isn't moving as quick as I think everyone would like it to.
Nick (00:34): No doubt. Whether you're a real estate professional or a home seller, it has felt like it's been a very sluggish spring-summer market. And there's a lot of different factors in that — with interest rates being what they are, with the geopolitical situation, with midterm elections coming up. I think there's a lot of buyers that are kind of like, ooh, I don't know. Sitting on the sidelines.
Dave (00:56): It could be that — or it could be your house just needs some updates.
Nick (01:02): Wow. Are you trying to segue us into a...? Yeah, I appreciate that. That was really smooth. I tell you what, we're getting close to ten episodes and all of a sudden we're finally figuring out some transitions. Well done, my friend.
Dave (01:15): Well, it's okay. It's early enough that the episode can still go off the rails. So don't hold your breath.
Nick (01:21): Stay to the end to find out just how off the rails this whole thing goes.
Dave (01:28): Everyone likes watching a train wreck.
Nick (01:34): No, you transitioned excellently, and that is what we're wanting to chat about. Last week's episode was: how do you price a home? That's an important question that as real estate professionals we get asked quite a bit. And an adjacent question to that is — okay, before I list my home, what kind of updates should I do? Do I need to do? That's something that we get asked all the time. And similar to the pricing conversation, where frustratingly for some people perhaps the answer is "well, how we price your home really depends on what sort of strategy and approach you're wanting to take and what your circumstances are" — well, in a lot of ways the answer to what you should do to prep your home really depends. And it also really depends on your agent. I think that even you and I might have some disagreements on the things that need to be done, ought to be done. And that's where a lot of the value is, in having us help people work it out.
Dave (02:44): It has its micro context and it's also macro context. And that's where having an agent that knows your local market — and knows what is on the market and what's for sale at what price — really starts to make a difference. You know, the CMA piece, the broker opinion of price that local agents give when someone wants to sell their house. It makes a big difference if we're talking a new construction house in a relatively new subdivision, or if we're talking the '70s neighborhood in an older subdivision, or even if we're getting further back into historic neighborhoods — if you could draw the line arbitrarily, I'd say the 1950s and back. The age of the house is going to play a huge role in what type of updates need to be done, if we're talking primarily cosmetic or major mechanical systems.
Dave (03:40): So there's just a lot to unpack. The type of updates you might want that are really surface-level and cosmetic might move the needle, they might not. And if we're talking an older home that needs major mechanical or structural type major systems — the exterior, the siding, the roofing, all those sorts of things — those things could really hurt the sale of a home. So that's what we're going to be going through.
Nick (04:15): And maybe to make that really objective for folks: take the Evergreen Highway neighborhood, old Evergreen Highway, where you've got a lot of housing stock that's from the 1970s and 1980s, and where certain updates could actually have a swing on the valuation of the home by potentially a few hundred thousand dollars, maybe even more. There's some really beautiful custom builds that are new down there, there's some homes that have been updated really beautifully, and there's some that haven't been touched since 1977. And depending on what's been done, it can add crazy value to the house — versus a neighborhood like a lot of the new construction that's in Ridgefield, where a bunch of neighborhoods have all been built up since 2020. And it's like, yeah, you could put hundreds of thousands of dollars into the home and it might move the valuation by ten percent. You might get a fifty to sixty thousand dollar bump, but you're just not going to have the same return, because of those neighborhood dependencies. So that context matters a ton.
Nick (05:40): As we frame up this conversation, I think there's really two different types of improvements or investments that you might want to make in your home before listing — two categories that we'd make recommendations in. One is defensive and the other would be offensive. You feel like that's a fair way to...?
Dave (06:04): Yeah. So maybe to define that a little better. If we're saying defensive, we're talking about repairs or updates that need to be done — like we said, major mechanical systems. Say a roof that's near the end of its life. Maybe if you have really worn siding. If we want to get really into the weeds here: my history working back in Minneapolis is in really old houses, and you see it less here in Clark County, but there are a couple neighborhoods closer to downtown Vancouver where maybe you could be looking at foundation issues. Out here there could be major concerns for earthquake prevention and seismic retrofit — all these sorts of things that can become real barriers to the sale of a home. Both from the psychological standpoint of a buyer not wanting to buy a house that they think might fall over if there's a mid-level earthquake, all the way down to it becomes difficult to get insurance on these properties, and insurance and/or loan underwriting.
Nick (07:10): Right. So those would fall into the bucket we're calling defensive. We're trying to maximize the audience who this home appeals to — because if you have enough of those major issues stack up, you're really limiting yourself to a cash buyer or an investment buyer. So that can really hurt the sale of your home if you don't get it to, let's just call it, ninety-five percent of the comparable homes for sale that are around it.
Nick (08:08): And I think this is important — of course, we're recording this in August of 2026. As we mentioned right at the start of the episode, housing affordability is really tough right now, and this is a theme throughout the entire conversation. But the number of deals that are falling out of contract during the inspection period is at a record high. And so to avoid getting your home under contract, going pending, and then having the buyer back out during inspections — there are defensive moves that you may want to make. Addressing things that aren't traditionally considered sexy, like the cosmetic fixes, but the things that actually keep your home under contract. So I think you spelled those out really well. These are your roof, your mechanical systems, sometimes electrical, electrical panels — all of that stuff that an inspector is going to easily flag. And unfortunately these usually tend to be pretty big-ticket items.
Nick (08:59): So, defensive on one side, and we'll dig into both these sides a little more. But then offensive — how are we defining offensive?
Dave (09:10): So with the offensive, it really is: how are you going to wow a buyer and create that emotional connection? Very few people pull up to a house and look at the roof and are like, "I love it, I want to have it," just because of the color of shingles or whatever. It's usually things like the exterior paint and the landscaping that create that first impression. And then moving inside of the home, the quality of the flooring and hard surfaces. Have there been updates to the key living areas like the kitchen and bathrooms? Those are the sort of things where you're really trying to make an amazing first impression on a buyer and drive emotional value that way. What would you add to that?
Dave (10:13): I'd say it's trying to capture interest, and it's trying to make sure you're at the height of everything that is trendy, to put it roughly. And there is a bit of — you could put most buyers into, say, an eighty or ninety percent category that are going to gravitate towards whatever's trendy, because it's kind of human nature. We like what's hot, what we see everyone else doing around us. The whole new construction industry is based around this idea, right — of continuing to push forward the trends. And it feels like it's kind of just a cycle that repeats every twenty or so years, of the hot paint colors and the hot tile finishes and material finishes. And so if a home is really behind in that, that could more fall into the defensive side. But more often than not, if your paint color's a little off, that's not going to be the major driver for the purchase of your home.
Nick (11:17): But maybe if your house feels really fresh and crisp and like it's not dated, that's going to command a higher price. There's going to be a lot more desire for that, because of the emotional connection people feel with "this feels like what I'm seeing on the internet and on all the renovation shows" and anywhere else people consume what they start to think of.
Dave (11:45): And then to maybe put the cap on it — I would say there is sort of a maybe ten percent of the market that is really interested in something very specific, something very niche. It is funny, because you do see these properties that are — I don't know if eccentric is the right word — just what I would consider a wacky paint color scheme throughout the whole house, and just really interesting. And those properties do still sell, but they're harder to sell, because there's a lot smaller market for them.
Nick (12:13): And maybe the practical way of thinking through the difference between offensive and defensive is: HGTV shows are going to focus far more on the offensive changes. You're not going to see long extended segments on HGTV about the different types of windows and the selection process for which windows to put into the house. And even sometimes the minor structural changes that you can make to a home are often more offensive than defensive — because while it might enhance the livability of the home, it doesn't change whether the home is inhabitable or not, whether or not you can get a mortgage for it, whether or not the appraiser is going to flag it.
Nick (13:23): All right, that's probably good in terms of setting these things up. So let's just take, for example, a 1997 home that's all original everything. It's in a great neighborhood. It was '97 when these original owners bought it, so they probably paid — let's just say it's in Fisher's Landing — they probably paid seventy-five, eighty thousand dollars for it. And now there are comps that are selling for closer to six hundred, six hundred fifty thousand dollars, depending on condition. And so that's your situation. You come to us and ask: all right, we haven't done anything to this home in the thirty years or so that we've owned it. What should we do?
Dave (14:18): Well, the first thing we're going to look at is what updates have already been done when we walk into the house. And the first ones we're really going to consider are going to be those defensive items we talked about — the really obvious ones, the things that are going to hold up the sale. So I already mentioned a couple of them: your roof, your water heater, your furnace. In a lot of cases, checking to make sure that there's no major water ingress, anything that could have caused damage — mold.
Nick (14:52): Mold, really big one out here.
Dave (14:56): And any wood-eating insects — not so much out here, but pests and those kinds of things. The major psychological things that are both going to deter a buyer, but also from a material standpoint hold up the sale: the loan process and the appraisal. And so I think that's a big one to go over right now — the appraisal. And it depends a little bit on which market segment you're in.
Dave (15:27): Something important to know is that if we're talking FHA or VA financing — in previous episodes we've talked a little bit about how those loan products have extra rules and verifications on them, because they're considered inherently more risky to the lender. They're government-backed, right? So the government's going to protect their investment and backing with a more stringent appraisal process.
Nick (15:52): Yes. And so let's just say the roof on this twenty-nine-year-old house is original, and it's an asphalt shingle roof — it's not tile or metal roof. So twenty-nine years, you're well past life on a roof. The rule that most appraisers for FHA and VA are going to look at is: if the roof has two years or less of remaining life, they're more than likely going to require that roof be replaced in order for the home to be funded with an FHA loan.
Dave (16:25): So this now comes into a question of price, and your speed that you need to move, and who your buyer segment is. If six-fifty — I don't know if it's fair to say that that's starting... it feels like with everything getting inflated, 650 is getting closer to a starter home in Clark County.
Nick (16:52): Certainly in Fisher's Landing. Yeah, you can find something cheaper.
Dave (16:58): So that would be a real question we would ask, or we would also ask ourselves: do we think that the segment here is likely to be a VA or an FHA loan? And how much demand for the house is there? I would say even with some conventional lenders, if a roof was actually — in this example we're making up — twenty-nine years old, I don't know if you've seen it, I've seen not specifically a roof but other major issues hold up a conventional loan too.
Nick (17:37): That's true. Especially if there's moisture in the crawl space, or anything that the appraiser flags and that the underwriters look at and say, if this is a real issue and persists for the next couple of years, the value of this home is going to decrease precipitously.
Dave (18:00): And if it hasn't been clear — what we're talking about in the defensive category, the majority of it is a hold-up from a lending perspective. Is that safe to say?
Nick (18:19): Either lending, or that the buyer — even if the lender were to approve it. Let's just say it's a conventional loan and the lender says, "Yeah, that's fine that the roof is at the end of its life," and the buyer looks at it and says, "Okay, sure, but as soon as I close on this home, within the next year or so I'm going to need to finance or budget for a whatever, twenty, twenty-five, thirty thousand dollar roof project."
Dave (18:45): Do you think — what percentage would you put to buyer hesitancy versus appraisal when we're talking defensive major renovation items?
Nick (19:00): I think you're right to recognize that it really does depend on who the target market is. Any time that we're working with a seller, we have an ideal client profile in mind for who this house is most likely going to appeal to. And so yeah — if we think that based upon community, neighborhood, price point, it's more likely to appeal to first-time buyers or people that would be looking at government loans, then there's certain recommendations that we'll probably make defensively based upon the appraisal type.
Nick (19:32): But especially in this market, at least my sense is, these defensive moves — I weight them more heavily on just: how do we not lose a buyer while they're under contract during inspections, where some surprise comes up and the buyer says, "Shoot, that's going to be another twenty thousand dollars, thirty thousand" — or you combine these things and they get overwhelmed by that big number. And then as a seller too, you get frustrated, because you feel like either A, you're losing the deal, or B, you're getting hammered hard on additional credits or purchase price reduction during that inspection period.
Dave (20:28): That's interesting. I think another aspect, when we're thinking about positioning, also has to do with — specifically in Clark County — how much new construction is around the home. And that's going back to the micro and the macro piece, zooming out a little bit. And what you just mentioned about the sale price of the home, and how people are reaching for housing, and nobody wants to get stuck with a thirty thousand dollar roof after they close on the purchase of a new home. So if we're talking — let's say you're in a really high demand area like Fisher's Landing, and a lot of your competition has the same issues going on, where maybe most of the housing stock in any given neighborhood has worn-out roofs. Well, if just down the road there's a new subdivision that has all brand new houses that aren't going to have any of these issues — to really compete with them, you can't come to market with a house that you know is going to need a roof replacement, unless you price it accordingly.
Nick (21:40): Right. So talk to me about just how that strategy — and I know this starts to get back into how we price a home, the previous episode.
Dave (21:52): And these two episodes have been positioned next to each other partially because they're not independent of each other. It is a given pull. And I think from what we've seen with our clients is that the main driving factor has to do — well, I'd say it's twofold. It's how much work the client wants to do to get the house ready, and what's their timeline. Lining up a roof replacement is not a small feat, to do good due diligence. If you're fortunate enough to know somebody or have an existing relationship, then in a lot of cases it'd be a no-brainer. But if you don't really know anyone and you have to interview three contractors, and they don't know you, you're not going to get any priority. If you're looking to make a quick sale, that could take you —
Nick (22:50): It could easily be a month.
Dave (22:52): I was going to say a month to two, just to have the house done and ready to go to market. And also permitting and inspections. There's just a lot of factors to doing a project of that scale. And so, not to get too far off track, there are other things — your water heater, your furnace — that are maybe a little bit easier from a timing perspective. And I suppose to a certain degree, how complex the project is really determines the payout you're going to get. The roof, if it's in bad shape, is going to hurt you a lot. But if it's brand new, it's going to help you a lot. To a lesser degree, your furnace, which is less costly — well, in most cases it would be less than your average roof — it is going to hurt you, but it's not going to hurt you as much.
Nick (23:46): It's kind of relative to the size and scope of the project. And I think it's important on this note that with these defensive items, one of the sort of bummers is that very rarely do you get a full return on the investment. So let's just say that you are putting on a thirty thousand dollar roof. We would not typically say that that's going to add thirty thousand dollars of value to the home. It might add twenty, twenty-five, but it's rarely ever going to be a one-for-one return. That's going to be the same typically on HVAC systems. Really, most of the stuff that's behind the wall is not super cosmetic. And so that's where a lot of home sellers hesitate, because they're like, "Why would I spend a hundred dollars only to get eighty-five dollars back?"
Nick (24:51): And so, to your point earlier — we can have the conversation about, okay, well, if you recognize that the roof is shot, we've got to price the cost of a roof replacement in, unless it's some really unique circumstances. But you are going to lose out on a potential buyer pool. Even if you priced it in that way, with VA or FHA inspections you may have to replace the roof anyway. You may lose the buyer, or there may be other buyers that just — they love the house, but they're not going to make an offer because they don't want to have to deal with the project of a roof. And so it's like, all right, you might not get a hundred percent return on your investment, but you're going to significantly reduce the objections to your home, which then increases the likelihood of a successful sale and typically accelerates the timeline for that sale process pretty significantly.
Dave (25:51): So would it be safe to say that you're hedging against being stuck on market and sort of dying in the stale listing pool? Is that a good way to think about it — you're buying a quick sale?
Nick (26:10): Which — not to get too far out of the scope of what we're talking about today — but that really is what ends up hurting. You can have to price cut thirty grand in a hurry in a hard market. And maybe if your reference point for the market has just been the last five years, when it's been a really strong seller's market, it's like, yeah, well, you can kind of get away with this stuff.
Dave (26:46): I think as we opened the show up with, talking about how the market's slowing down a little bit — I think these things are starting to matter. I don't think, I know — the more the market swings to a buyer's market, the more these defensive items really start to make a difference.
Nick (27:05): So let's just say you've got two identical 1997 homes, and for all intents and purposes they're the exact same floor plan and they have the exact same updates, but one has the original roof and one has a brand new roof. And the one with the brand new roof is listed at six hundred, the one with the original roof is listed at five eighty-five. Which one do you think is going to sell first?
Dave (27:30): Probably the one with the new roof.
Nick (27:34): I think so. I think that the fifteen thousand dollar price difference is going to be worth it to the buyer to have the new one. And even if the other were to go down to five seventy-five — the convenience and certainty of, hey, the roof is done, it's been signed off on, hopefully there's some transferable warranties. Especially in this market, that peace of mind and just having a move-in-ready home that doesn't have these big scary defensive-item replacements — that seems to mean a lot to buyers in this particular moment.
Dave (28:16): Maybe a little helpful note as sellers are thinking about this. It's already hard to want to dump money into a house you're planning on getting rid of, but I would put a caveat: if you're going to do any of these major repairs, you really want to get a reputable company, somebody who's known locally. Now is not the time to GC your own — find a sub crew that can roof your house, and then if they do it wrong they're in the wind — or to not pull a permit. Those are the things that are going to get noticed. And in a lot of cases — we're not talking about flippers today — but most agents, most people can see and tell if something was done in a really fast, cheap, poorly done way. Where in a lot of cases that could be almost your worst outcome. Maybe roofs isn't the best example, but certainly when you're talking interior remodels and mechanical systems, something that's really easy for a buyer to see. If it looks and feels like any Joe Blow did the work and there's not much confidence there, that can actually be your worst outcome — that you got somebody to do it half price, but your end product instills less confidence than if it had just been not updated to begin with.
Nick (29:40): Yeah, I've seen — I'm smiling because I've seen some tiling jobs that were like, yeah, I'm pretty sure they made it worse.
Nick (30:00): So maybe this is a good transition point from the defensive spend, which I think we're largely on the same page on. We're going to make a lot of defensive recommendations of, hey, these are the things that are liable to cause your deal to fall out of contract, whether from appraisal or inspection. It's going to be worth spending the money to just have greater certainty and speed in selling your home. But on the offensive side, I think that this is where there's a lot more variability.
Dave (30:55): So we're talking variability. We've defined it as primarily cosmetic updates. So I guess let's pick up with our example. It's a twenty-nine-year-old house, it's surrounded by twenty-nine-year-old houses. What are we envisioning? Let's paint the picture for the listener.
Nick (31:20): Exactly. It's a nice established neighborhood, and let's just say about half of the houses have been updated within the past ten years. By updated we mean full kitchen remodels, maybe some light structural modifications to the home to open up the floor plan, paint — those are the kinds of things I have in mind.
Nick (31:44): And so we have sellers that will ask, should we replace the countertops or refinish the cabinetry if we haven't done anything with it in close to thirty years? A lot of times with bathrooms there's questions about — the tub-shower combo is looking rough and has gone out of style, especially in the primary bathroom. Or the tile countertops for the sink and vanity. Do those things need to be replaced? And this is where it can get a lot more tricky to discern, one, what's the relative return on investment going to be, and two, how do you make selections that are not just according to your taste, but that are actually — to your point earlier — a trendy choice that is going to appeal to the vast majority of buyers in the market today? And that's something that I think requires both a lot of judgment on what's worth it, and then real taste.
Dave (33:08): Taste is taste, because not everybody has it.
Nick (33:14): Well, not everybody has it, but back to the earlier point — it is also a subjective thing. I think that's why it's helpful to think about roughly ninety percent of the population falls into this category where their taste is formed primarily by what they see currently, in the places they consume information and media about houses.
Dave (33:38): Magnolia magazine. If you're not really paying attention and you don't interact with this all the time, you might not even really understand that all these trends are just trickling down from these designers and these magazines and all these other places. That's how the industry works. And it is funny how some markets lag, and then it always feels like a game of catch-up to some degree.
Dave (34:05): But I guess the point I was putting in there was just to note that there is still going to be that ten percent that wants the burgundy room with the shag blackout curtains.
Nick (34:24): Taste is subjective, and that is a taste.
Dave (34:32): So if you take that example of the really eccentric house that exists — the cost to even just do surface-level updates, if the whole house is like that... and maybe I'm latching onto this a little too much, because I've been in so many of these houses in my career, of like, man, just to get this to a sort of average finish that is going to apply universally to most buyer profiles — I mean, you could be talking fifty or a hundred thousand dollars in a three thousand square foot house, just if you're replacing carpet and flooring and repainting most of the interior walls. And so it would be my opinion that in a lot of cases you're going to be better off just trying to find that eccentric buyer than to dump a hundred grand into a prospective house. Because so often it seems that when a house has that much personal touch, even just repainting and new carpet could be really hard — you're kind of brushing into a full-scale renovation at that point.
Nick (36:07): Which — interestingly, maybe we should just share some of the facts about these surface-level... we say surface level, but modest. Is that fair to call it? We're calling it a modest kitchen update. So back to our example house, before we get any further off track: if you did a modest kitchen remodel — and market to market it's going to vary — but let's just say a thirty thousand dollar kitchen remodel. Some more basic cabinets, getting rid of — no hate on the golden oak people from the '90s —
Dave (36:48): It's coming back though, man. I like it on floors, but I don't know about the cabinets. The honey oak's back.
Nick (36:58): No, but if you swapped it out for something a little more standard now, a little more trendy — even something, if you could use the term, basic. A nice white-finished cabinet, feels bright and classic.
Dave (37:09): Exactly. Typically you see around a hundred and fifteen percent ROI. So you're not losing any money on that. And as we're going through some of these numbers, just keep in mind that these are averages. It is still possible to lose money on a kitchen remodel if you make the wrong choices.
Nick (37:32): And that was back to your point of, it does take a discerning eye and choice and style. Just because it's new doesn't necessarily mean that it adds value. But to just put real numbers on it: if you spent thirty grand to have either the cabinetry refinished or repainted, if you put in a new kitchen sink with a new faucet, maybe change out all of the hardware on the cabinetry to make that more modern, and then maybe even just some simple appliance upgrades — you could spend thirty thousand dollars, which sounds like a lot of money. But we're using Cost vs. Value. This is a big report that's put out by Zonda, and they do it market by market. So looking at the Portland market, they see that there's a hundred fifteen percent return based upon appraisal data. So you spend thirty grand, you get thirty-four thousand five hundred in value added to the home at resale.
Nick (38:35): And again, a lot of that's just because the buyer comes in and they say, wow, might not have been everything that I would have chosen, but this kitchen feels nice and fresh. I can live in this from day one and don't feel like I've got to do anything to it right away. A major renovation is something that feels like a sore, a point of contention — you're walking in and it's bothering the new owner of the house. It doesn't feel good.
Nick (39:20): And it's more than just the dollars. It's also just the time and inconvenience, and having to find contractors, and go however many weeks it is where you've got a kitchen that feels like a construction zone — which is all the same things that as a seller you feel, the resistance to making these kinds of changes. But if you really care about maximum return on investment and selling, that's a great area to spend the money.
Nick (40:02): Now the problem is, one, even at that modest kitchen remodel, if you make the wrong selections — go way too dark on your cabinetry, choose some sort of really odd, cheap-looking quartz — those things can absolutely hurt you. The other way that you can go wrong is that you spend a hundred and thirty thousand dollars on a kitchen remodel, which is not hard to do, especially if you're going to change cabinetry layout, have to redo plumbing and electrical and pull permits and a bunch of that stuff. Once you start to get into the territory of a major kitchen remodel, that Cost vs. Value guide and survey shows that actually you only get about half back. It's a fifty percent return on investment. So there's a balancing act there for sure.
Dave (40:48): And so I hear the comment already coming: well, if that's the case, why do flippers do it? Why is there flippers in the business? I guess there's a couple points. The first would be, I'd say here in Clark County there's actually not a ton of flippers, because the margins in the last five years — the price at which a flipper can get the home has become a lot higher than maybe it was between 2010 and 2020, and the price of material has gone up. But in general, the retort I would give to that is: flippers are making their money primarily on the purchase of the home, initially. And they're also making their money on the fact that they have working relationships with professionals where they get a better price on the work to be done. So if you're someone who's handy and you have an old house and you're like, hey, I can do a lot of this myself — that could be a real area where you could get all the benefits of doing the renovation but not pay the premium of having a professional do it. Now, once again, I would preface: the work still has to be done well.
Dave (41:50): But if you've seen all these flippers, they came in and they did all this — coming from that background, the main thing to flag would be, if you're watching HGTV, I can tell you whatever number they put up for the bathroom, it's never close. What these things actually cost in reality versus what they cost on TV — there's a real disparity there.
Nick (42:20): Gosh. I don't know how old it is, but I saw one of the Chip and Joanna Gaines Fixer Upper episodes and they were replacing like fifteen windows in a house, and their budget for it I think was four grand. It was something ridiculously low like that — it was coming out to about a thousand dollars a window.
Dave (42:52): It's like, in no world is that remotely close. You're probably looking at four to five times that at minimum. A base-level cheap window is going to be starting at five hundred dollars an opening just for the cost of the window. And then that's to say nothing about the cost of install, which is going to change market to market. The point being — if you're sitting here and you're thinking, gosh, it seems like people are making all this money flipping houses, more often than not I'd actually say the biggest factor that makes a flipper successful is the initial purchase price. And a lot of the time these guys are getting houses very cheap off market, because they're going down non-standard avenues. They're looking at foreclosure reports, tax delinquency, all sorts of ways these guys source these deals. But if that's what your perception is, you sort of have to readjust for what reality is.
Nick (43:52): And the other recommendation I would have is: anything that's a multifaceted renovation project, that's where you really should start to be careful. Just because that sort of stuff — a kitchen remodel, a bathroom remodel — very easily overruns cost. If you're getting a quote for your roof being replaced, it's a much more straightforward project.
Dave (44:20): Like, are there things that could come up? You know, I say that and then I think back to all the times of, you're re-roofing a house that was built in 1900 and it has what's called skip-board sheathing, and so then they have to re-sheet the roof. Stuff like that comes up. But in general, re-roofing a house is like, okay, the price they give you is what it's going to be. But a lot of people may somewhat naively enter into a kitchen remodel and they think, yeah, you gave me a price for twenty-five — and they have this picture in their mind of what they're going to get, and then reality is twenty-five thousand dollars doesn't get them nearly as much as they want.
Dave (45:05): So on the more cosmetic updates, there can be ROI there. You have to make the right decisions. And to some extent, you should either really have someone you know and trust, or really know what you're doing if you're going to be obtaining multiple bids. And the same would go for bathroom remodels also.
Nick (45:30): And we take a pretty minimalistic approach, I would say. The concerns about costs running over — those concerns increase exponentially once you're having to pull permits, move plumbing, move electrical. If there's anything where you're having to open up walls, it just creates more and more opportunity for other issues to be discovered. Which maybe you think, well, it could get discovered anyway in an inspection — but we want to reduce the risk of creating more issues and more headaches in prepping a home for listing.
Nick (46:04): So it really is just: okay, what are the few things that we can do that would actually have a return on investment and actually capture more buyer attention, create that emotional connection? Which generally is going to be light touch — like refinishing things. We're not doing big layout changes. Maybe some light landscaping to make sure that there's nothing that looks dead. Basically, when somebody walks out into the backyard — and this is where people can way overdo it too on landscaping — most of the time the experience that you want them to have is, wow, this looks like a really peaceful and great place to hang out. Not, wow, this looks like a huge project. Which could be because it's a really crappy backyard that needs a lot of work, or because it's so over-landscaped that it looks like I'm either going to have to be a part-time gardener or hire one.
Dave (46:58): Sharpen up your hedging shears.
Nick (47:02): It's just crazy how you can fall off on either side. And that's really where we're here to help people — just finding that golden mean of, here's where the investments and improvements are actually worth it, here's the ones that you really ought to do, and here's everything that you just don't want to touch.
Dave (47:14): I think that's good. Maybe to try to wrap it up here — maybe two things. We hit them with a couple of the things that consistently have high ROI, and they're kind of interesting, and they have a lot to do with the initial curb appeal. The future buyer is pulling up to your house and they walk up and they're looking at it, and they're seeing, in most cases, if we're talking a '90s house, the garage door and the front door. Especially here in Vancouver — big old garage doors.
Nick (48:00): Gotta have your RV or your boat or your toy, right?
Dave (48:08): So incidentally, those two items are oftentimes some of the highest ROI things that can be updated. What do they say on a garage door? It's like close to two hundred percent.
Nick (48:20): Two-sixty percent, yeah. Which maybe that's just a gap for the garage door industry — they need to raise their prices. But to that point, that's something you can take and file away in the back of your head: if you do a really nice job painting an older garage door, that can really update the appeal.
Nick (48:45): And the same with the front door. I mean, front doors get a lot of abuse. The paint can be beat up, the finish can be faded, or maybe it's just kind of an older, pretty basic looking, ugly front door. And it's crazy — I can't tell you how many times I have gone to show a house and the door is like thirty-plus years old and the lock hardly works, and I'm struggling to get the client inside. And it just creates such an awful first impression of what the home is like, how it's been cared for. And front doors, relative to everything that you could do to improve your house, is not that expensive. It increases that initial curb appeal, it increases the appeal from the inside of the home, it can help with energy efficiency — I sound like a freaking door salesman right here — but it sends a message about how secure the home is. There's a lot of psychological triggers that are associated with that front door. It's a phenomenal place to put your money.
Dave (50:00): And they constantly update these studies. I remember seeing one back in the day, which was that homes that have real natural hardwood flooring always sell for more. And so in older markets — probably more applicable to Portland than Clark County, not that there aren't some in downtown Vancouver — so often everyone had heard that study for ten years, so any time a house went up for sale you'd always see everything else would be left alone, but the hardwood floors would be refinished. So you'd have this house that would have all this paint, holes in the walls, needed a fresh interior paint, the kitchen was completely dead.
Nick (50:45): It's a funny deal, because people follow these — real estate agents and flippers, they follow these trend reports that say what is the highest demand item in the sale of a home.
Dave (51:08): Maybe that's the real takeaway: keep an eye on that if you're getting ready to sell. And if you're in a home that is a little bit older and could use some updating, press your agent on — all right, what are the things you think we need to update? Hopefully your agent's prompting you with these questions. But look at the majors, and don't get surprised once you're under contract and something comes back like, "we didn't really think about the furnace." And that sounds pretty obvious, but you'd be surprised what gets missed. And then also think: is there any strategic positioning to really try to create that heightened emotional desire for your specific house?
Nick (51:55): And while there are no guarantees in life, it's usually — especially in the situation that we're describing, where somebody's been in the home for twenty-plus years and has great equity — I mean, this can be a great area to pull some of that equity up front to make the improvements, in order to get a higher, quicker, more certain sale, not get beat up nearly as much, or risk falling out of contract. Just ultimately having a much better experience. That can be a really worthwhile investment of your home's equity, or using some of the different financing programs that a lot of the contractors offer, so that you're really just able to pay off all of these projects with the net proceeds from your sale.
Nick (52:40): And as Dave has kind of alluded to, this is something that we love helping people work through. And fortunately we've been able to develop a lot of relationships with good and reputable contractors and tradespeople to help with these things. So if you are looking for a connection or a referral, or just want an opinion on "hey, what should we do" — that's absolutely the kind of thing that Dave and I love to do, whether you're local or not. Reach out to either of us. And we'll link to the Cost vs. Value guide, since we've referenced that a few times, in the show notes.
Nick (53:30): I did want to get your thoughts on one more thing before we sign off, and that is home staging.
Dave (53:38): Probably should be its own episode, huh?
Nick (53:42): Yeah, maybe just tease it a little bit here — just because there's some crazy stats out there from the staging companies about what home staging can add. Like, they say insane — it's a three hundred twelve percent return on investment, because you spend three or four grand on staging but it causes your home to sell for twenty-five percent more and sells in seventy-three percent less time on market.
Dave (54:10): Yeah, I don't know exactly if I'd buy into all the specifics, but in general I think we're in agreement that staging is in almost every case a necessity. Even just as you think about walking through a home — even if the staging sucks, just the fact that there's something in the space, filling the space out, it makes it harder to really... and it sounds a little snaky the way I'm saying it, but it's just part of selling and listing a home. You're making it harder for the potential buyers who walk through to really get a good look at the home. More of the surfaces are covered. There's stuff distracting from: has this floor dipped a little bit? Is there a big hole in the drywall behind the couch?
Dave (55:00): So that's sort of the first. And then the second is just the fact that people are really spatially unaware.
Nick (55:15): Unbelievably so. And I think it's because it's so rare that we ever walk into unfinished, unfurnished spaces. And so we kind of need those anchoring points that help us feel the size of a room relative to what we're used to. And so by being strategic about placement of couches and tables and beds, and the size of those things, it really helps when somebody walks in and they're picturing their own furniture. How is my couch going to fit in this room, with my bed and my nightstands? Okay, they've put a king in this one and it fits great. And it just removes the opportunity for them to walk into a space and have their knee-jerk reaction be "it feels small," with no basis other than the fact that they're just going off purely what they feel.
Nick (56:10): So — agreed that the statistics there are probably oversold. But I also have never listed an empty home. I can't see myself doing it, because I just think it makes such a significant difference.
Dave (56:30): Well, and back to the psychological standpoint of what you're saying about people not walking into houses — all the houses I've ever walked into, having primarily the investing background, are like major rehab projects, right? And maybe that's just an association with me. But in general, I think people — unless it's maybe like a new construction home that you're walking in a community — outside of that, if you're not in the industry you probably don't walk that many empty homes. And especially when you get into a two or three thousand square foot home, there's really just sort of an emptiness that's there. It's kind of a hard feeling to describe, but it doesn't feel like home.
Nick (57:20): I would describe it as sad.
Dave (57:26): Just the sadness and the bones. No, but it very much is — there's a psychological lump to get over there.
Nick (57:43): I think there's an association with bad, just a negativity. No one likes the idea of an empty home. It feels uninviting. And I think too, the fact that most people associate that emptiness of the home with properties that need to be rehabbed or distressed.
Dave (58:05): Distressed, exactly.
Nick (58:10): So — big fan of staging. If it's a truly vacant home, that staging can go a long way, versus doing other updates to the home. Because the stagers that we use do a really great job of matching the furnishings to the space, and that helps the space feel more modern and updated and trendy, to create that emotional connection. For homes that are owner-occupied, we still use stagers, but it's more on a consultation basis — how do we best leverage the furniture that the owners of the home already possess? Usually it's a lot of decluttering, and what to move out of the house, so that we really maximize the space while still making it livable in the owner-occupied situation.
Nick (58:55): But that's definitely a big part of the prep. So: going through the defensive moves, going through the offensive moves, recommending staging — and then of course that doesn't get into any of the media and marketing kind of stuff that we do, but that's a whole other episode for another time. Any other thoughts to bring us home here?
Dave (59:20): No, I think we've gone through it thoroughly. I think, as always, the main recommendation is: push your agent a little bit, make sure they're thinking about these things. Think about them yourself as you're getting ready to list.
Nick (59:37): And if you're in Clark County, give us a call. Links in the show notes below. Be sure to subscribe to the show — if you know somebody thinking about buying or selling and think they'd be a good fit, share this with them. We'd love to connect. We'll catch you in the next one.
