Welcome to my “insider” column on real estate where I’m going to share my thoughts and ideas with you in hopefully what will be an informative and frank discussion about real estate in Alaska. So how come it is that two homes with the same floor plan and square footage on the same street in the same neighborhood can have substantially different values? How can one home be worth $20,000 more than the other? It’s the identical shingles on the roof, the same foundation, even the same builder. Well, the truth of the matter is that buyers buy with their eyes and if they don’t like the paint color on the walls, that spectacular chandelier that you spent an extra $500 over the builder’s lighting allowance for or your grey carpet, you may have just missed a sale and lowered the value of your home.
The over customization of a home whether it’s a remodel or a brand new home is a big negative when it comes to resale. If you’re going to let your teenage son paint his wall three different shades of green. then be prepared to paint it out before you put your home on the market. Ditto for the purple dining room wall and red kitchen tile. But, you say, I’m paying for all this and I want it to be “my” home. Statistically speaking, Alaskans like to move around. We’ve had a very stable housing market compared to the lower 48 and chances are you’re only going to live in your home for five or seven years before you get the urge to change your nest. So be careful because your selections can have a very negative impact on resale. Neutral colors are best and that means boring beige. Add your favorite color to your furnishings and accessories but always create a neutral backdrop. Use color for accents, not permanent and costly items to replace like carpet, tile and countertops. Buy a red kitchen aid mixer at Costco but don’t put red on the floor or countertops that’s too expensive to change out. Don’t put purple carpeting in the living room. Recover your sofa in a purple fabric instead.
If you insist upon customizing your home, then be prepared to take a reduction in price. Trends change on an annual basis. There’s even an organization called Pantone that announces the “color of the year”. Last year it was orange. Remember all those orange jackets, shirts and blouses everyone was wearing? Last year, I insisted a builder paint an orange wall in a new condo. It sold but we were prepared to spend the $150 to paint it out if necessary. But, an orange countertop, or even backsplash, would have cost two to four times that amount.
Homes on the market get a certain reputation. Even though there are over 1,100 realtors in the Anchorage area, there are only about 750 who are actively engaged in selling real estate. And guess what? We all talk to one another, send emails, flyers of properties. Properties are like people; they get a certain reputation whether justified or not. An over-customized home can actually end up having fewer showings. Buyers who walk into a home and are hit with a barrage of color become overwhelmed. The vast majority are just too busy to remodel because they’re working two to three jobs so that they can qualify for a mortgage. Sellers who make it easy for them by creating a neutral palette will get more showings and a higher price. Homes owned by relocation companies generally get it right. Before putting a home on the market, they not only go in and give it a professional cleaning, but frequently replace carpet, paint and even countertops to create a neutral palette. If they don’t, they give it a substantial discount, 5 to 10%, to move it out of the market. Over the years, I’ve seen some lovely, well-built homes in premium neighborhoods that have been over customized and have sat on the market for a very long time and then sold for less than a comparable property down the street. And, unfortunately, that lowered sales can statistically follow that home for several years.
It’s hard to say no to yourself and hold your personal preferences in check when remodeling or buying a new home. But just be aware you may end up paying twice for that favorite orange tile you just ordered for your kitchen backsplash.