I’ve got a client whose house I’ll likely be selling next year. We recently had a pest inspection that revealed about $20,000 worth of repairs and termite work that are needed. That’s a lot of money for an elderly woman on a fixed income. Since the house needs lots of updating too, we are likely to sell it when she is ready next year in “as is” condition.
There are a few choices you can make in this situation, one of which is to update the house completely. It will likely need at least $200,000 or more to bring it up to today’s standards. My client said, “I guess you’ll be marketing this house as a fix me upper.” That’s because for someone in her mid-80’s it doesn’t make a lot of sense to live through an extensive construction project, even if she did have the capital to do the work.
This week a new house came on the market at 564 Montecillo Rd in Terra Linda. Back in January of 2021, during the thick of the pandemic, I sold the house for $1,165,000 with 15 offers. I had priced it at $999,000 a week before Christmas. It was a classic ‘Fix Me Upper’. The seller lived in the house for three years, fixed it up and resold it for $1,695,000 in 2024. They probably put a couple hundred thousand into it, maybe as much as $300,000 so they made out fine and they had a nice place to live for a few years.
Fast forward to this week, and that house is back on the market asking $1,695,000 again. If the property does not attract multiple offers and get overbid, which is questionable, the current seller will end up losing money on the commissions (likely 5%) and the costs of sale. Side note, if the property closes this year the city resale tax is $2 on every $1,000 of the sale price, or $3,390. If proposition W passes, the San Rafael resale tax will balloon to 2% of the purchase price, or $33,900! VOTE NO ON W! San Rafael is the only city in Marin that charges a resale tax.
Maybe the current seller on Montecillo is very well off and money isn’t an issue? It’s quite possible, as Marin County is loaded with people in advantageous financial positions. If they do watch their money, then this is an old school lesson. Buy the worst house in a nice neighborhood, fix it up, and enjoy the equity you create. If you buy something that is already fixed up and money matters to you, then you should think about making that house your home for the next 10 years or more. In 10 years time, the market is likely to appreciate significantly. Owning for a short period of time 2-3 years, and expecting appreciation is a gamble. Medium term, say 5 years is less of a gamble, but you don’t want to find yourself on the wrong side of a downward cycle. Stay in your house in Marin County for 10+ and you are pretty safe in terms of appreciation.