The numbers involved are staggering. In the United States alone, residential real estate as an asset class breasts the tape at $40 trillion. This year alone, 6 million houses will sell and countless million houses will be refinanced. Tens of millions of houses will be “improved” or “remodeled.” In certain markets, waiting lists for contractors and other service providers run into the months.
For many, home improvements and upgrades are not seen as decisions for economic enhancement; instead they are seen as lifestyle decisions.
For others- especially imminent sellers and buyers- these changes are fundamentally economic in nature- Can they improve the velocity of sale? Can they improve the salability of the house? Can they increase the sale amount while also satisfying the buyer?
The data would suggest that even for those not directly in the process of sale, upgrades can be economic boons. Data and perceptions, both, are at play here.
Data snippets include these actions and the ROI associated with them. Gleaned from our experience in helping customers,
· Interior Painting: 3.1x return on refurb dollars.
· Kitchen: 2.3x
· New baseboards: 3.3x
· Updated Bathrooms: 2.5x
On the other hand, the perception side is largely about both emotions and metaphors and less about hard numbers.
When buyers contemplate a house, they want to generate a feeling of “trust”, “comfort” and the metaphor of “feeling at home.” When houses are, thus, “move in ready” and upgraded, positive and comfortable emotions get triggered. On the contrary, houses that require work also require a lot of imagination from the buyer and the immediate metaphor that arises is “I’ll have to put my nose to the grindstone” to get this “project” done. In the intensity of home-buying, emotion and rationality mix.
Ironically, we get a lot of data on emotions and perceptions. 90+ % of prospective home buyers refer to desire, impatience, and anxiety as key elements in the process.
Our experience suggests that homes that are upgraded and “shiny” allow buyers to cut through the emotion and land at decision quicker and with more confidence and vigor.