Go Bold or Go Home
By Ryan Siebert
As a speculative investor in real estate I’ve often found myself walking the thin line in design choices between going bold and keeping things consistent with the market. It’s a choice between doing what “everyone else” does and being a trendsetter. I’ll ask myself and my team three questions before making the final decision.
- Define your reason for change – In other words what is your why. In fact I use this question as a basis for many business decisions that I make throughout my entire life, business or family related. I will go through an analysis of the change in question from one house to the next to figure out why we want the change in the first place. What we often find out is that we are changing because we are bored with the current design, whether it be kitchen cabinet color, hardwood flooring stain, paint, or a bold accent wall with the newest designer tile pieces. However, if we are able to determine that the reason we are putting the new design in place is to add value to our home and separates us from the competition, we will move forward with the new design.
- What value is the change going to bring to the home. I’m often referred to as the king of spreadsheets. Majority of the analysis I do involves busting out a new spreadsheet to analyze the cost of project or in this case cost of new design. This is especially important when we are making layout changes to the house. Opening up an entire level, while bold and trendy, often has a reaction of losing rooms. So the main level bedroom is often lost as a sacrifice to bringing the walls down for open exposure. I have to be able to analyze the market to determine if main level bedrooms are bringing in more value than an open layout. For design decisions that involve finish material changes, (color, material, etc), we have to be able to justify either a price increase to cover the added costs, or a market time decrease to cover our holding costs. So if we add a slate tile accent wall to the entrance with a floor to ceiling fountain will the price of the home go up? If not can we justify doing the upgrade by decreasing timeline from 120 days on the market to 60? I warn you, the further you get away from numbers on spreadsheets and into speculating timelines and added value the more risk you are putting on yourself.
- Can the Realtors selling my homes justify the change? The Realtors are the salesmen of my homes. They need to be able to believe that the change will help them sell a home. It’s always a “less is more” mentality with me and my salesmen. The less they have to talk about the home the more I know the home is doing the sales for them. We want to make our sales conversations to be about how quickly we can close and for what price, rather than the product they are selling. The last thing I want is my salesmen thinking that they can simply tell the clients we can “make changes” for them if they don’t like the new design. The bottom line is changes after construction will end up costing us time and money and it defeats the purpose of making bold changes.
When thinking about making bold decisions in your home, whether it be customized or a speculative purchase make sure you can justify the cost. More importantly if you love it, then it doesn’t matter what anyone else thinks, it’s your house after all.
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