In today's home market, some sellers may choose to remodel while waiting

By AMY HOAK
McCLATCHY NEWSPAPERS

last updated: July 11, 2008 04:16:25 AM

In order to sell houses in today's market, real estate experts say sellers need their homes to outshine the competition, must be very negotiable on price and be prepared for a months-long stretch on the market. It's enough to make some sellers sit this season out, waiting for conditions to improve.

But some homeowners will take it one step further, figuring that if they can't sell their home they might as well make it more comfortable during the time they're living in it.

"There is a lot of attractiveness to thinking about staying put and making changes to the current home," said Kermit Baker, senior research fellow at Harvard University's Joint Center for Housing Studies.

Overall, the center is expecting remodeling dollars spent this year to decline, considering the home-price decreases in many markets, Baker said. But there is likely a substantial group of homeowners that will put some dollars into their homes anyway -- granted they have the money to spend, he said.

Those who are following through with remodeling plans are saying "based on everything out there, I'm going to hunker down and make the best of my current living conditions," said Craig Smith, CEO of ServiceMagic, a company that connects homeowners to prescreened service professionals through the Internet.

In general, people are keeping their remodeling projects modest these days, said Mark Richardson, president of Bethesda, Md.-based Case Design/Remodeling and Case Handyman.

"In the boom times, three years ago, when there was more of an abundance of appreciation and consumer confidence ... you might have expanded your dining room, made it a little bigger," he said. "Today, maybe you're putting in crown molding, recessed lights or putting in a bay window." The company is noticing an increase in feasibility studies and design contracts, while actual construction contracts are slightly down, Richardson said.

Maybe consumers are not taking action, but they're "testing the waters," planning their future projects, attending home-improvement seminars and reading books about remodeling topics, he said.

"A lot of people are saying, 'Let me think about it,' " he said. "If all of a sudden we move into the spring and there's an uptick in consumer confidence, they will flip the switch and go." Market conditions are definitely playing into consumers' remodeling reluctance.

According to the spring 2008 remodeling sentiment report released this spring by www.remodelestimates.com, 92 percent of the 5,000 homeowners surveyed said that falling home prices were affecting their remodeling plans. The cost of remodeling is their greatest concern.

To save on money, 64 percent said they'd do some of the remodeling work themselves and 33 percent said they wouldn't hire a general contractor, according to the survey.

While there is a lot of uncertainty in housing markets right now, that doesn't mean a homeowner has to sit on the sidelines, said Dan Fritschen, founder of www.remodelestimates.com and www.remodelormove.com.

"It's not a better or worse time to move," he said. Your home might be able to fetch a lower price right now, but "the house you want to buy has depreciated too," he said.

Seems simple enough, but homeowners often have difficulty accepting that their homes could sell for less these days, Baker said.

"I've heard from a lot of builders that households will come in and negotiate aggressively," he said. "But then when the household isn't willing to be as aggressive on the sale side of the (current) home ... that apparently jinxed a lot of deals."

It's also not a bad time to remodel, Fritschen added. There is an available labor pool to do the work, given the slowdown in new home construction, he said. And some people, frustrated with the volatility in the stock market, might decide an investment in their home is a better way to go, he said.

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