When John Faier was planning the construction of his condo a few years back, he pulled out all the stops on the 2,800-square-foot home, adding all manner of optional and upgraded features–not the least of which were hardwood flooring throughout and an elaborate hardwood staircase, top-of-the-line appliances and slate floors in the bathrooms.
“I spent a lot more making it upscale because that was what I thought was requisite to make the unit sell later on,” the North Sider recalls. “A lot of people said I would never get it back.”
It’s a common concern: How much should one invest in the items that go above and beyond the builder’s standard offerings? Where is the line that separates a “distinctive” home from one that has priced itself out of the ballpark?
Unfortunately, there’s no chart, not even a time-honored rule of thumb on what’s always a good idea versus what always constitutes getting “carried away”: Tastes and expectations of the market tend to shift, creating surprises (and disappointments) every day. There’s only good research — asking those who traffic in home sales and understand the market’s current mood.
Then there’s instinct.
John Faier, who ignored all those warnings that he was sinking too much money into the condo, sold the unit in six days. “Two buyers wanted it,” he recalls. He’s not talking specific prices, but allows that it was “25 to 30 percent above comps,” meaning that it sold for about that much more than comparable condominiums in his area. And, yes, he says, he got his money back.
“Have it your way” may have started as a slogan for a fast-food chain, but it has come to symbolize an American attitude: From hamburgers to high-rise studios, we want just about everything “personalized” to our own taste.
That’s why, when you buy a home these days, there’s a very good chance that you’re going to get the opportunity to change many aspects of it, from the color of the roofing shingles to paneling in the basement, from the finish on the faucets to the plumpness of the carpet padding. Even in modest, first-time-buyer homes, many builders are trying to stand out from the competition by offering upgrades that give their buyers a sense of personalized style.
On one hand, it has an element of kid-in-a-candy-store fun, this picking and choosing the parts of your dream home. It’s also potentially daunting, because there’s a lot of money at stake: Local builders report that their buyers are routinely adding 15 to 30 percent to the basic purchase price in optional and upgraded features. Then there’s the concern that the pricy bathroom fixtures that you thought looked so chic in 1999 might look tacky to when you put the house on the market in 2004.
“Contrary to what appraisers think, they think that square footage counts, but that’s not what the market wants,” according to Sheila Brooks, an agent with Koenig & Strey’s Libertyville office who often works with clients who decide to build and who has built three houses of her own. “The market wants details. They want a house that’s finely detailed, not a great big box.”
Brooks and other agents and builders agree. They also agree with the common-sense presumption that the inclination to add details increases as one moves further up the economic scale. There’s one school of thought pertaining to which extras are prudent for first-time buyers, and another for more upscale homes. Over and over, people who advise buyers on these matters urge their clients to take into consideration how long they’ll live there.
“The typical buyers should be thinking along the lines that they aren’t going to stay in the house for 20 years, like Mom did,” says Ray Kennedy, an agent with Re/Max of Naperville. He says such concerns are critical in his market, where job transfers are a familiar story. “In a selfish manner, I have to admit that I am looking to sell that home for them later. I don’t want them to buy something that they can’t sell.”
In very general terms, here are some suggestions that came up repeatedly from agents and builders regarding upgraded and optional features in entry-level homes, where buyers’ finances probably will place severe limits on their choices:
– Make a good first impression at the front door. If the budget doesn’t call for hardwood flooring throughout the house (and most first-time buyers’ budgets don’t), a worthy alternative would be to put it in the foyer, leading to the kitchen or family room.
– Spend a little more to get the builder’s better-quality door and trim “packages” and kitchen and bath cabinets.
“We always tell them to get the things you cannot change later,” according to Susan Lanucha, sales manager for Smykal & Associates’ Kendall Ridge development in Joliet. “Chances are, they’d never get around to changing those things. They would move first.”
– Don’t think twice about including a basement, especially in our market, the experts say. “In a first-time buyer range, all day long you will get your money back,” according to Brooks.
– Carpet padding: There is a near-universal agreement that protecting the life of wall-to-wall carpeting by going for high-quality padding is worth the extra expense. For that matter, they say, get the better carpet grade, too.
Views are mixed on certain optional features widely offered by builders: whirlpool tubs, fireplaces, ceramic tile and fancier kitchen and bath faucets all get both enthusiastic “yes” and “no” responses for entry-level homes.
Two recent first-time buyers, Theresa and Curt Tulley, listened to the advice about upgrading things that would be harder to change later when the moved into their 1,670-square-foot house at Ogden Falls in Oswego in April. Because the builder, Lord & Essex Homes, had been offering financial incentives to buyers who had purchased within a certain time period, they could afford to add oak trim throughout the house.
Although Curt said they knew the trim would add some distinctiveness to the house at resale time, the trim decision was really a “personal thing” that would warm up the home. They also used the incentive allowance to upgrade cabinets and carpeting.
On the other hand, the Tulleys chose to add whole-house air conditioning themselves after they moved in, a decision that Lord & Essex design counselor Gerry Macri says is not the norm.
“Central air is very important to some people,” and it’s high on their list of options, she said.
Macri says that at the entry level, “$5,000 is a lot for many buyers to be able to add to a home,” and their choices tend to focus on upgraded ceramic tile, carpeting, and door and trim packages. Basements are included the base prices, she said.
The Tulleys picked out these features in a room set aside for that process in one of the subdivision’s model homes, an experience that is fairly typical in the home building industry.
Other builders may contract with major distributors of certain product categories, such as flooring or kitchen cabinetry, to coordinate the process for them.
A handful of Chicago area building firms have opened “design centers” in recent years, as the industry has realized the advantages of being able to show–and sell–their clients an array of features under one roof.
MCL Companies, for example, opened a 4,000-square-foot showroom at 1240 W. Belmont Ave. in Chicago that functions as a central decision-making spot for its projects throughout the city.
The company keeps detailed statistical records of what its buyers are choosing, and has determined that they allocated 10 percent of their purchase price on upgrades in 1997; in 1998, the number rose to 15 percent on an average sale price of $252,000.
MCL’s records indicated the most frequent choice last year was a relatively small one: niches to hold art and collections, usually on a stairway landing. They also requested volume ceilings in bedrooms, with high shelves to hold plants, glassware, etc.
“We monitor these choices every quarter, just to see what the trends are, what people are asking for,” Laber says.
Among other top choices of MCL buyers: pre-wiring to support security systems, home theaters and home-office technology; hardwood floors; kitchen cabinets in maple and cherry, with under-cabinet lighting and granite, tile and mirrored backsplashes.
With a bigger array of possibilities for consumers to sort also comes a bigger investment of their time, and some buyers admit that the process can seem overwhelming. Indeed, some builders advertise that their standard, base-price homes already come with the most popular options, to shorten the process for those who fear sensory overload.
Laber says that MCL buyers often spend hours on their own at the Design Center, just contemplating preferences. Buyers then formalize these choices in three scheduled appointments, she says.
John Faier, the aforementioned seller of the decked-out condo, purchased that unit through MCL as well as his current home, at Old Town Square on the Near North Side. In all, he has built three times: His first was a one-bedroom from another builder, “with just the standard selections,” he explains.
The current home is smaller than the second one, but lacks little in the way of personalization, from ceramic tiles to elaborate moldings to moving walls to accommodate a fireplace mantle and a bigger hallway upstairs.
“The last house was very contemporary-looking inside, with stainless-steel built-ins and black slate and green slate, and sleek-looking under-counter sinks. This house, I wanted it to feel like it has been here for the last 60 years. I went with a smaller space this time because I didn’t need a temple. I don’t need a monument to myself,” he explained.
Real estate agent Sheila Brooks suggests that as buyers move into more upscale housing, it’s wise to include hardwood floors, upgraded kitchen cabinets and countertops (granite or solid-surface such as Corian) and a third bay in the garage.
“You don’t need the whirlpool jets in the bathrooms, but upgrading your bath fixtures would be important, and crown moldings would be valuable,” the Libertyville agent said.
“If first-time buyers can afford it,” says Naperville agent Ray Kennedy, “they may be ahead bumping out the family room to get more space. It may also make them stand out from the others when they go to sell it.”
But Kennedy says he also urges buyers not to rule out things that simply make them happy.
“Now, take driveways, for instance, concrete versus blacktop,” he suggests. “That’s a personal thing, and typically in Naperville and Aurora, that upgrade might cost $2,700 more than blacktop. If (the buyer) has to sell the house in two years, is he going to get it back? No. Would he get a warm, fuzzy feeling every night when he pulls into his driveway after he comes home from work? Maybe.
“You can’t spend your entire life trying to make a buck.”
