July 19, 2006

Built-Ins Come With A Price

A: When discussing renovations that pay off well at re-sale, the first things that come to mind are kitchens, bathrooms, and hardwood flooring. But what about built-ins? In my opinion built-ins are more for your own personal needs rather than for investment purposes at resale as this generally pricey renovation cuts into showing size, appeases to very few buyers, is considered an added expense to the ultimate buyer to remove, and rarely fits the taste of the buyer should they decide to leave it.

If your planning on buying a home to 'live in' for the next 15+ years, than this post really doesn't apply to you. But for those of you that read my blog, you know Im really trying to bring out the investment side of real estate and how best to profit from it. So, when it comes to resale value built-ins just dont make any sense to me. Here are my thoughts on the negative aspects of built-ins when buyers come to view your property:

1. Raw Space Seems Smaller - The biggie. Not only are built-ins a costly renovation, but they cut into your living space making the room appear much smaller than it actually is. When buyers come to view the apartment they will be unable to visualize the actual space the apartment once was without the built-ins there. This artificial tightening of the floorplan would be enough to restrict bids submitted and/or the amount a buyer is willing to pay for your property. When they see the actual square footage listed on the webad or showsheet, it will immediately seem much smaller than other apartments they have seen already!

2. 9/10 Buyers Don't Want Built-Ins - OK, I have not done a collegiate study on this but from my experience out in the field I find that about 9/10 buyers do NOT like built-ins. Rather, they view it as an added expense to remove the renovation work while they grapple with the fact that they pay for this renovation in the purchase price of the apartment. It's hard for buyers to rationalize paying money for renovation work that they will need to pay more money to remove!

3. Taste is Hard to Predict - Lets say you are fortunate enough to find a buyer that is willing to pay a higher price for your property and the built-ins that come with it. Built-ins are not like paint on the walls! It is not an easy thing to change. If your built-ins are dark walnut and the buyers furniture is all on the light side, than its going to clash! Buyers think this way when they decide what initial bid to submit and having built-ins that are rationalized but not perfect may not get you the higher price you first thought.

4. Removal Expense: The removal expense is really not that bad for built-ins and your building super/manager probably can organize it for under $1,000 or so. The reason is they are more than happy to take the furniture and sell it somewhere or use it for their own needs, which keeps the removal expense down. From a seller's standpoint, I would use this fact as a marketing tactic when showing the property and explain to buyers that the built-ins can be cheaply removed restoring the apartment to its original size and condition.

According to my colleague Brady Titcomb who has had his share of exclusives with built-ins:

My experience with built-ins is that because they are mostly custom built, they are tailored to a specific taste which may not appeal to many buyers and can also date an apartment. Because they are bulky they make the space look smaller and most buyers don't realize how inexpensive it can be to have them removed.

Posted by urbandigs at July 19, 2006 9:56 AM

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