Manhattan buyers who are not handy around the house never had it better.
In last year’s tight real estate market, fixer-uppers got snapped up almost as quickly as fully renovated apartments, with buyers happy to foot the bill for any needed refurbishments. Now, apartments that need work are an extremely hard sell, and brokers are encouraging sellers to do anything they can to spruce up their apartments before putting them on the market.
“Buyers don’t want to do any renovations right now,” said Amelia Gewirtz, an executive vice president at Halstead Property. “They want it triple mint, bring your toothbrush. I have people saying, ‘I don’t even want to have to paint.’”
One reason for the change is the credit crunch, she said, which makes renovations more difficult to finance, and buyers more reluctant to tie up cash, especially after they’ve purchased a home. The other is the amount of inventory.
“If you need to do work in this economy, you’re being asked to go into your pocket and take out cash,” she said.
That’s especially true now that buyers are scarcer and more cash-strapped, said Brian Lewis, an executive vice president at Halstead.
“In a market where people are reticent to spend, it is harder for a seller to find a buyer who is willing to buy and then reach back into their pocket, into their reserves, to do a gut renovation of a home,” he said.
When renovations are required, a low price alone won’t sell an apartment, said Gewirtz, who is currently representing the seller of a pre-war three-bedroom unit at 825 West End Avenue that came on the market this fall.
At $1.795 million, the listing at the time was “the cheapest apartment on the Upper West Side for the amount of square footage, and probably in Manhattan,” she said, but it had a dated kitchen, which deterred potential purchasers. Even when the price was reduced to $1.595 million, “we couldn’t get buyers through the door because they didn’t want to do the kitchen,” she said. Gewirtz made the seller redo the kitchen and drop the price to $1.495, and “now the phone is ringing off the hook.”
Renovations don’t necessarily have to be elaborate — it’s more important that the apartment is move-in ready, said Gewirtz, who recommends spending $10,000 for Ikea cherry wood cabinets and stainless steel appliances. “At the end of the day, 50 percent of the people might rip it out,” once economic conditions improve, she said.
Contractor Paul Barnla, the owner of Artistic License Interiors, said more of his business is now coming from sellers doing minor changes to prepare their apartments for market than buyers renovating their new homes.
“A lot of people are getting ready to sell,” said Barnla, who gets much of his business from real estate agent referrals. ‘They’re just sprucing things up, not doing a total gut [job].”
He added that more clients are focused on smaller, basic repairs than in the past.
“People [are] spending less money on things like a Sub-Zero refrigerator, or some of the more elaborate things we do,” he said. “They’re still doing the basics– repainting, sanding the floors, upgrading things.”
In part, that may be because buyers and sellers are unlikely to do extensive renovations in the current environment, Lewis said. “People see a luxury renovation as a sort of exuberant expense in this market,” he said. “They’re more inclined to do a ‘fluff job,’ to just do the appliances and the paint.”
But a more important factor in the lack of appeal of fixer-uppers is the increasing inventory of apartments, he said. Now that buyers have their pick of homes, they’re unlikely to choose the one that requires an extensive renovation. “They’re thinking, ‘do I want to live through that?’” he said.
Owners who don’t want to renovate their homes before selling should make sure to price them very attractively, Lewis said. “They have to be so provocatively priced that buyers don’t mind closing and then spending $100,000 renovating,” he said.
For example, Lewis has a listing for a pre-war, one-bedroom co-op at 171 East 78th Street that needs work. While other brokers might have priced it at $800,000, he put it on the market at $699,000, said Lewis, who is now showing it four times a day.
“If you don’t have a pretty home, you better price it in a way that’s going to inspire offers,” he said.