gyr_falcon took the words right out of my mouth. As I said in an earlier post, in my area, $3M-$5M (and up) houses are the ones with real wood, gourmet kitchens, etc. $1-2M is one step above the tiny starter condo/townhouse. Read more about SF/Silicon Valley real estate, where a $1.8M house is 1200 sq ft 3 bedroom house with an IKEA kitchen and a tiny 4,000 sq ft lot.

We've gone ahead with the renovations. There are two pending sale homes in my neighborhood (one at $1.14 and one at $1.2), but they were quick pocket sales, so there are no photos or details available on-line. My HOA president tells me that they likely weren't extensively remodeled, as they were original owners. I'm hoping my agent can find out. Anyhow, we list ours in a couple weeks so I'll post an update when I have one.

HGTV has really done a "number" on homeowners. Smiles, this is a 1M dollar home, that you have lived in comfortably for years- without upgrades. Now, a salesperson tells you that you "must" do X, Y and Z- based on ??

What you're discounting is that now you're both simply "guessing" as to what that one buyer who will be yours might want. New granite? Huh- many, many buyers are looking for things like quartzite, quartz products, even marble. Will sneer at the new granite. Sorry, but it's true. And you've already admitted to feeling like this will be a 'random" stab at what somebody might like...

A simple example, but do understand that you're about ready to spend time and cash on a cosmetic "fix" that could end up being too "this or that" for many buyers. So- you go through all the time and expense, and could very well end up with materials that many go "meh" to.. You've narrowed your market to your own specs, without ever enjoying the benefits. Buyers can and will still consider remodeling costs, based on their own tastes. And they'll make offers to those considerations. What then?

The time to remodel a home in this way is in-the-door, so that you get to live with it and love it. Discount the property a bit for upgrades- and you come out ahead. You get to keep your cash, for whatever comes next. Don't have to live with the remodeling disruption, and won't have to live with a recent remodel that may very well "put off" buyers who would rather put their own tastes in, than live with yours and pay full boat.

As has already been rehashed multiple times in this email, it's all about the specific local market. Should we have spent the money 12 years ago so we could have enjoyed it? Yes, but we were frugal and did not. We won't make that same mistake in our new house.

My agent knows this market and my research into active and recent sales confirms her advice that we cannot sell a home with a 1990s era tile counter and carpet/vinyl floors without discounting it over $100K. Spending $30K hurts, of course, but I'd much rather make the house meet minimum neighborhood standards in the current market than discount it by far more than the cost of upgrading it.

I recognize that not everyone likes granite--but our local market doesn't have quartzite/marble/quartz counters. We are probably 5 years (or more) behind the HGTV trends. It's a suburban builder's grade neighborhood in a ridiculously overpriced metro area. Like I said in my OP, I see houses of this standard for $300K in the "average" small town (even as close as 3 hours' drive from here). Within 2 hours' drive, the same kind of house is about $600K. It's really about the land and proximity to high-paying jobs.

Anyhow, I'm done defending my decision to upgrade. I came here for advice, got some great tips, and thank folks for sharing their opinions. Given the extremes in the US real estate market, I think my post has surprised those of you in "normal" areas who just don't understand how a $1M+ house is not a mansion. Sadly, in these crazy markets, it's just a "typical" builder's grade home with average finishes, not upscale ones.

Agreed- no need to defend your decision.

But I think you've heard from several people on this thread who don't come from the sort of markets you mention. $1 million dollar total gut jobs? They're a dime a dozen in many neighborhoods in my city- mine included. 2 hours drive- lol. Try within a mile and half- find neighborhoods listed in Town and Country as "10 best in the country" etc etc. So perhaps take care with your down-sneer. Not all of us are without high-dollar experience, on this board.

The buyers here are sharks with money and ideas, who couldn't care less what a worried homeowner did on the "backside", since all along- they've had bigger and better plans. Not mansions, just extremely high dollar value of land/proximity/views. Sorry, but for every buyer that might appreciate your "next step up, upgrades" there are three that see past them- discount it for a variety of reasons. . That $30K you just spent goes into the demo pit, as they execute their own dream. And offers often reflect.

I do wish you luck. If it's really worth it for you to put in $30K of upgrades expecting another $100K on the other side, go for it. Just take care on putting anything in too specific, for tastes.

There are subtle differences between the two scenarios that can make all the difference.

902 Juanita, you live in an area where they do gut jobs after purchase. I agree that, in your area, it would not make sense to upgrade. My impression is that smiles33 lives in an area more similar to mine, where it is likely the buyers are stretched a bit thin just to purchase, and remodels are more often down-the-road, done one room at a time. In markets where there is likely not going to be an immediate gut, it does pay to have some major rooms upgraded to visual can-wait status.

If many rooms/items appear to need to be done immediately, the offer will be greatly reduced, because they are thinking of the amount of money that would be needed to completely remodel those rooms to what they want, not just the amount needed to upgrade them to get them by. And for stretched buyers, that money is going to come out of their offer amount.

That is true. But "builder's grade" in 1997 indicates that the whole house is likely a "downgrade" at this point. so- replace the counters, tiles, even hard surface floors. Now we get to upgrade the stains. Still left with carpets builder's grade-carpet in areas- not popular, these days, and builder's grade. And we still haven't gotten to appliances- 1997 builder's grade.

If this is "builder's grade", then the bathrooms are in serious need of an upgrade. Fix those, too?

All I'm saying is that this is a rabbit's hole that has barely an endpoint. I have no problem with somebody ready and willing to do work. But the OP should be very realistic with a "$30K" rehab, for sale, and what that will mean on the open market.

Even the hot ones are turning chilly. Welcome to 2017.

Wow, 902 Juanita, I'm sorry you perceived my posts to be "down-sneers." It was not intended that way at all. I was trying to convey that the astronomical prices here do not reflect reality. As I pointed out in my OP, the $1M house here in this area is akin to a $300K house in most of the rest of America. We also live accordingly (e.g., road trip vacations, with one vacation per year by plane; bringing lunch to work or eating the free food the companies offer so we don't leave the office; sending our kids to public school as we can't afford $40K/year for private school; living with ugly purple vinyl floors for 12 years so we can save that money for the kids' college education fund instead; etc.). I always assumed that folks who could afford a $1M+ house were wealthy and that people who said they felt middle class despite making over $100K were idiots. Then I graduated from college and faced the reality of rent (and subsequent real estate purchases) and the limited "buying power" of money in a hot market. Since we are extremely close to family and have professional licenses in this state, we will be staying here where my entire extended family and DH's extended family live.

I think it's hard to understand that most of us in these expensive areas have middle-class values and pocketbooks. Our salaries are higher than the typical American salary, but the buying power feels like what $80K will buy in the rest of the country. Like I've said repeatedly, what $1M buys here is what $300K buys in the rest of the country. As gyr_falcon pointed out, many aren't in a position to gut $1M houses. We move in and live almost paycheck-to-paycheck to afford the house. My own brother and his wife bought the $1.8M house I mentioned in an earlier post (3 bedroom, built in the 1960s, 1200 sq ft on a 4000 sq ft lot with an IKEA kitchen put in about 10 years ago that's already falling apart). They don't have the money to gut the house and rebuild. They, like me and my neighbors, are double-income professionals who do not consider ourselves wealthy.

P.S. Since it took me so long to type the above post, I missed your later post. 1997 is considered NEW in my area. 1960-1980s are typical housing stock age. The fact that a developer has managed to convince the city to let them build 100 brand new houses on what was the last open space in the area is what made me nervous. Now my 1997 is not the newest in the 10 mile radius.

smiles, if I've misunderstood you- OK, and apologies. Just be very careful, within what you spend, with a salesperson's advice. I assume you're moving somewhere else, and maybe you won't need the cash you spend to upgrade/remodel your next place. That I can get. I also understand the hand-to-mouth of expensive properties, although I'm not one of them- this time, Been there, though.

Just take care. You have to move somewhere, next right? Where will the $$ be most meaningful to you? And are you bottom-line sure that $30K will get you and extra $100K? Or maybe- you'll be a renter? I don't know.

Big numbers, and I only encourage you to think smart.

Thanks for your thoughtful advice. I do agree that the cash could be spent on higher priorities, but I'm hoping it's a strategic investment. A new house was just listed today, not renovated at all (same tile counters, same oak cabinets, carpeted floors, not freshly painted as they have some bold paint choices up on the walls) but it is clean. It's listed at $935K. It is 600 sq ft smaller and 2 years older, but still--that is $140K below our list price and $200K below the price of the 2 other homes that have been renovated and are currently pending (per my HOA president)!

In my area, this is what 962K buys you (house closed a few weeks ago).

4 BR, 1550 sqft, lot 3,692 Sq. Ft; and no, no tear down.

http://www.movoto.com/washington-dc/4416-windom-pl-nw-washington-dc-20016/pid_rqf5p97uah/

And 1 mio further out.

https://www.zillow.com/homedetails/5400-Brookeway-Dr-Bethesda-MD-20816/37180823_zpid/

Just updating to say the house has now been listed at $1.075M. Photo of new flooring and new kitchen counters attached. We also paid to repaint white to brighten up the place (we last painted it about 7 years ago in Benjamin Moore Shaker Beige). I prefer more color but deferred to the "experts" who said just go with white.

Fingers crossed we get an offer soon...

usually I'd advice against reno-to-unknown-buyers' tastes, just like Juanita, but it looks great-nice job. I wish you a quick and easy sale!

(I know your area a bit-have friends there. friends and their stories. oh my. we're in Southern OC, so very high prices -but SF/Silicon Valley is just something different..)

Very nice! I did some upgrades to sell and it worked out very well with a full price offer in just a few weeks. Hoping you get a great offer soon!

Thank you. I'm pleased to learn that there's been a lot of interest so far. My agent told me she held the broker's showing today and had a large group, including 4 agents who brought clients with them for private showings. They didn't want to wait for this weekend's open houses. One agent already asked her if we would accept a full price offer today! We wouldn't commit to accepting any offers today, as we haven't had enough time on the market yet. Plus, I do hope it will go above list price as it's a better location and potentially equivalent interior to the 2 pocket listings that went for more. But at the very least, I want to see how this weekend goes. If we get only one offer next week and they are strong buyers, I'd be very tempted to just accept it even if it's just the list price. It's still less than what we paid 12 years ago (plus the additional money we sunk in for this recent "refreshing" and the solar rooftop system!), but then we'd be out quickly and cleanly (versus waiting for a few weeks or months!).

Knowing a bit your market, I'm sure it will go fast. And, yes, the only thing that puzzles me-why it's not, like, 500K more? lol. Granted, I don't know exactly where you're at..I just know the craziness that's Silicon Valley.

Anyway. I was sure you already have some very good feedback by the time I posted. Keeping fingers crossed-it will be fine!

smiles, I enjoyed and learned from your thread.

If you don't mind: city or zip code?

I'd prefer not to share exact city/zip. Let's say within 15 miles of Palo Alto/Mountain View/San Jose.

smiles, thanks for replying.

Looks great! Personally, I like white walls: Modern, clean.

Would you mind sharing what granite this is? It looks perfect with the cabinets and really updates the whole kitchen.

Thank you! It's New River White. Also, we got our first over list price offer! Hooray!!

Last update, as I'm not sure how much I should reveal on a public forum, but my agent just emailed me that we have 15 offers, all over list price, with the top offer at $135K over list price with no contingencies at all (e.g., no loan contingency, no appraisal contingency, etc.). WOW! I am absolutely thrilled and more convinced than ever that the $30K we invested in "superficial" renovations were worthwhile.

Fantastic! Congrats!

Hehe, nice! Good job!

Let us know when you close!

That's terrific news! I'm glad it all worked out so well--and that you love your new home!

Wow, that is a lot of offers! Happy for you. Nice, too, that you are happy with your upgrade/reno decisions. Hope you have a swift and easy closing. It helps that there were so many offers--they might not want to risk losing the house to another by trying to play hardball with inspection issues, etc.

It was the white paint :)

Good luck.

Congrats!

I'll post again after we close in about a month. :)

Hope all goes well with closing.

smiles33, congrats! Ain't Bay Area RE grand? LOL!

For those who are interested, this was a recent headline in our local paper, near where the OP lives:

980-square-foot
cottage in Palo Alto
sells for $623K over asking

http://blog.sfgate.com/ontheblock/2017/05/04/980-square-foot-cottage-in-palo-alto-sells-for-623k-over-asking/

I assume the Palo Alto house will be a tear-down. My inlaw's house in Westchester County NY sold for $500,000 over asking - bidding war between 5 people, and that was 17 years ago. And it was most definitely NOT a tear-down, but the kitchen and baths hadn't been upgraded in 50 years.

Reminds me of a colleague who moved to the Bay area, thinking real estate prices weren't all that outrageous --- until she realized that the sales price was just the price at which the bidding started....

We close on Thursday, so I don't want to give away the details yet, but yes, real estate is insane here. So are accompanying salaries and cost of living, though. If only we could figure out how to make a Bay Area salary but live somewhere else with a far more reasonable cost of living (without the 2-3 hours one-way commute, as some people currently do because they live in Central California 100+ miles away and commute here)!

Unfortunately, there are plenty of people whose salaries aren't commensurate with cost of living, e.g. Medical residents or postdoctoral reasearchers at universities live a plusher life in other parts of the country.

nosoccermom: that was meant to be tongue-in-cheek. I am fully aware that many hard-working people with physically grueling jobs aren't paid commensurate with the cost of living, while others with cushy desk jobs (like mine) are paid far too much given the level of exertion. I don't think my equivalent job in most other markets would be paid as highly.

Didn't mean it as a criticism. Rather, many people are amazed or jealous when they hear about the high salaries (and the "expensive house") without calculating the high cost of living/housing; or even more of an issue, people get paid based on some national standard (such as federally issued grants), which sound high, but are actually very low in Palo Alto, where you pay 2,000/month plus utilities for a "charming 255 sqft" converted garage.

Thanks for clarifying. I misunderstood your point. Yes, it is ridiculous here, which is why I referred to people who commute from 100 miles away (resulting in 4-6 hour round-trip commutes). They do it because for that same $2,000 a month, instead of getting a 255 sq ft garage space in Silicon Valley, they can possibly buy a 3 bedroom house in the Central Valley.

980-square-foot cottage in Palo Alto sells for $623K over asking

Golly, and here I've been grousing about cottages that size going for $15-20K over asking where we're looking. The overage in Palo Alto would still buy about three of them here.

FINAL UPDATE: Cash is being wired into my account per escrow agent so we are done! Hooray! We sold for $1.23M and the winning buyers threw in an additional $2,000 credit toward our closing costs. As mentioned earlier, we received 15 bids (all of which were above list price) and we countered 5 of the strongest bids. The final top two bids were both for $1.23M without any contingencies and in as-is condition. Ultimately, the winning bidders (first-time home buyers who fell in love with the house!) threw in an additional $2K in closing credits and also had a substantial down payment (about 50%) so we knew appraisal wouldn't be an issue. Thank goodness for the larger than standard down payment, as the house appraised for $30K less (only $1.2M).

On a related note, I also found out the final sales price of the 2 pocket sales by the same builder in the neighborhood (but they are located on a thoroughfare, not in a cul de sac). One sold for $1.14M (this was in the worst location, right on the corner next to the 4 lane main street). The other one (on the same street but further into the neighborhood) fell out of escrow (its list price per Zillow was $1.1M). The second house is back on the market now at $1.06M. We'll see what happens there.

Thanks again for everyone who gave advice and those who followed along!

Big congratulations to you! I bet you are relieved now :)

Congratulations!! I wish you and your family lots of new happy times in your new place.

And this thread showed me once again-as much as I adore where you live-and especially my wonderful friends that live there-I kinda dread moving ..:) we might one day..but yes, sounds.. not easy.

Congratulations!

These discussions regarding HCOLA prices are always fascinating to me. I've spent my entire life in a LCOLA in the Midwest. I make a very good salary here, but research within my professional organization shows that living in a place like SF would only get me about 1.5 times my current salary. However, the cost of housing is obviously at least 10 times our local prices. Your house (even with the upgrades) would have gone for $150K here. We just built a custom 3,000 sq foot all brick home for way under 300K, literally a 2 block commute from my office. I can't even wrap my head around how the average worker manages to keep their electricity bill paid in an area with such high real estate costs, much less pay the rent or the mortgage. Have the prices continued to soar, or do you see them leveling off?

And congrats on the sale by the way!

And I always wonder how houses can be so inexpensive in LCOLA area. Even if labor and the lot are lower, the materials, such as roof shingles, flooring, windows, doors, appliances, cabinets, counters, tiles, faucets, blinds, etc. aren't that much lower.

chelle324: It sounds like an amazing commute--I can't even fathom how much it would cost to build a custom 3,000 sq ft home within 2 blocks of my office. Maybe $5 million (of which $4.5M is the cost of the land alone to fit a 3,000 sq ft house)? I bet the $500K to build the house may be underestimating it, too.

I agree with nosoccermom: I am shocked the cost to build is so low. I had always assumed the appliances, wood, flooring, etc. are the same cost everywhere, so the difference really was the cost of labor. Or do suppliers double/triple the price when they ship the items to HCOLA?

It's a little bit of everything and it all adds up. Demand for everything. Competition for space. It costs more for suppliers to do business. They have to pay for business space at much higher costs. They have to pay more to employees. After all, employees need a place to live. It all gets passed on. There are no free rides. There are the embedded costs of government with higher building standards. These increased standards cost money. They are necessary as it costs more to safely build in earthquake and hurricane zones. It starts to add up in very real ways.

For comparison, my culdesac lot was $42K. Here, in a nice subdivision, lots range from $30-50K. Even the exclusive gated golf course communities are usually $100K or lower. My permit with the city cost $350, which covered all the foundation, mechanical, framing, and final inspections.. $2000 to connect to the electricity, sewer, water, and gas. I would assume the rest of the difference is in labor as homechef said, along with the increased regulations and safety issues. I've read some of the stories here about the cost of permits, etc that make my head spin! The workers in all the industries make more, so that cost is passed on. Our framing crew was 12K in labor. I'm sure the guys on the crew weren't making more than $10-15 an hour, if that. But here, you can still buy a nice starter home in a safe neighborhood for less than $100K, or even rent a very nice home for $800-1000/month, so their money goes a lot farther.