Build, Remodel, Walk Away?

Happy 3 Day Weekend Naples Friends,

I’m taking you on a journey through rebuilding, remodeling and buying or selling homes in original condition. I see lots of mistakes and scores around town this season. Hopefully, I can help you avoid the most common pitfalls and help you purchase smart opportunities. This post reminds me of that song by Kenny Rogers, The Gambler! Here’s what it means for real estate in Naples, Florida.

Here’s what I’ll cover:

Building vs. remodeling.
Remodeling vs. selling in original condition.
The exceptions.
Advice for owners of aging homes.
Advice for buyers buying aging homes.
Advice for developers looking for projects.

Building vs. Remodel

Last year I had a client who was looking to remodel in Bay Colony Shores. Bay Colony Shores was primarily built in the ’90s. Some of the homes there (by Naples, Florida standards) are prime for tear down activity at this point but the desire to tear down is way greater this year. Even some of the homes I wouldn’t have torn down are being demolished. Because of the lack of resale data, my clients chose to purchase something different in a Pelican Bay high rise.

Fast forward one year. All but one of the subject properties we discussed were sold. Two homes we didn’t talk about had already been torn down. Another is in permitting getting ready to be torn down and a third is going through a major remodel. A new buyer isn’t even considering remodeling but looking for something to tear down and investors are in full force to do the same. Another client has opted to focus on a newer home in Park Shore.

By the way, if you’re living next to a home that is getting ready to be torn down be prepared. While the home next to me was being built I suffered through construction noise, 3 flat tires due to careless tradespeople leaving nails on the road, endless trash in my yard, 4 broken sprinkler heads due to contractors driving on my yard, countless occasions when my driveway was blocked and even more instances when my entire road was blocked, loud music being played at the construction site and one 8 hour stint in the middle of the summer when somebody cut an electrical line and blew our transformer. I especially liked when the workers used my yard as a shady picnic location and left their food/trash all over my yard so my dog could feast on chicken bones and everything else they left behind. Good times!

Luxury Homes Built In The ’90s Are The New Naples Stepchildren.

The last time I saw this sort of snubbing happened when Naples exited the Mediterranean era and entered the Transitional period. Mediterranean homes throughout Collier County were seriously overlooked and horrifying unpopular. This hit Mediterra especially hard since the entire neighborhood was built during that time. Homeowners scrambled to “de-Med” their spread both to make their homes more transitionally inspired for their new personal tastes and to get them sold.

Apparently, the memo did not make it to Estates at Bay Colony as property prices remain too high to tear down and remodel which is pushing inventory levels up to two years now. The highest anything has been able to sell there is $611/foot but half of the current listings are still priced in the $700’s/ft. and one is over $800/ft. This is a perfect illustration of the disconnect between buyer and seller. It’s time to take down those 25-year-old drapes and lose the wallpaper borders of the 80’s or consider reducing the price in some cases substantially.

The ’90s built homes offer a few things ’80s built homes typically didn’t. High ceilings, ensuite guest rooms, more open concepts opposed to the closed in kitchens of the ’80s. Today’s designs in comparison have mostly transitioned out of any formal spaces. No formal dining rooms or formal living rooms (unless we’re talking about new construction in Port Royal. By and large, people hate them unless you’re in the top of our Naples market, people aren’t attracted to them anymore which is making some floor plan styles of the ’90s and older “passé” and poised for functional obsolescence.

Functional obsolescence, a term commonly used in real estate, is a reduction of an object’s usefulness or desirability because of an outdated design feature that cannot be easily changed.

Remodeling vs. Original Condition

If you’re located in a 40+ year neighborhood (Port Royal, Aqualane Shores, Old Naples, Moorings, Park Shore, Pelican Bay) you’ve already seen an enormous increase in teardown activity. If you’re located in a 30+ year neighborhood (Pelican Marsh, Collier’s Reserve, Audubon) tear down activity is right around the corner. Early ’90’s homes were built nearly 30 years ago (WHERE DOES THE TIME GO). Poor insight into the design is really starting to hurt current homeowners and here’s how:

I was called in last year to discuss what a current homeowner should do to their ’90’s built home in Collier’s Reserve. They had already masterfully remodeled the kitchen and it was gorgeous. It was also enormously expensive so they wanted to know if it was smarter to remodel the rest of the house or keep it as is. The problem with the home is the master bathroom was really small. If they go through the expense of remodeling the entire house, they’ll have a beautifully remodeled home but most of today’s buyers are going to have a real problem with the master bathroom(the second most important room in the house) due to its very small size. That could mean they may not recoup their entire investment in their home. I’m pretty sure they didn’t like what I had to say because they felt their bathroom was just fine. I see responses from a huge amount of current buyers, a typical homeowner doesn’t.
This week I showed a couple of houses in Bay Colony to buyers who are interested in remodeling. Because of the floor plan, and sunken living spaces, remodeling is just not a smart viable option for those houses. Even if they used the finest, most eye-popping materials, the houses are going to be a problem resale. Those sunken living rooms are a skull crusher. I wish I had a nickel for every time I’ve seen somebody nose dive off one. STAY AWAY FROM THOSE.
Just over a decade ago I was working with an investment group who were remodeling properties around town. We doubled our money on a home in Pelican Bay. We NEVER went for homes with low ceilings. I see low ceiling remodels in Old Naples, Moorings, Park Shore and Pelican Bay. DON’T DO IT!

Here’s the rub: 80’s and older single family home communities are already competing against new construction. 90’s neighborhoods are getting ready to do the same and that’s going to change the entire landscape and value of everything else there.

If you over improve your aging home you could find yourself losing the entire prospect base of those who want to build new. That includes end users and developers. Your viable prospect base could go down substantially too because it will take a special buyer who will value you changes. Every year I see instances where a homeowner had made improvements to something somebody else is going to want to tear down. The house will sell two ways. It will take a long time to find the buyer who will appreciate the improvements or the house will sell for lot value and the seller will lose the money they spent. Hire an agent who can tell you whether a home is poised for a remodel or its wiser to build new. I’ve already had this conversation a few times this year with buyers looking.

The Exceptions

Homes that were built with enormous foresight or interesting properties that can be redesigned for a newer approach don’t always have to be a knockdown. That older home I talked about earlier in Pelican Bay is COOL! I can totally see an artistic type going in with their amazing artwork and eye for design absolutely transforming that place into a real knock out!

Older homes in Old Naples, Aqualane Shores and Moorings have some outstanding character that would be served exceptionally well through preservation and thoughtfully carried our renovations. I looked at a great remodel in Royal Harbor that is simply incredible!

Beachfront condos are exempt for the unseeable future as well since there aren’t any plans for anything new on a widespread basis. Once those babies start coming down though, the same process will occur.

Waterfront condos may be seeing some redevelopment activity in the future as plans for One Naples quietly hurdles through the planning and development process.

Condos located in areas where no new construction is taking place or will be taking place in the foreseeable future are safe as well.

Aging Home Homeowners

Don’t get the bulldozer out just yet. There’s a zillion factors that go into whether your home is going to stand the test of time including lot location, floor plan, ceiling heights, design. Just yesterday I was in one of the oldest homes in Pelican Bay. It had been on the market before so I had a chance to review the old MLS photos before going. The online presentation was a full fail compared to how the house and character looked in person. I felt bad for the owners. Even though that house was built in the early 80’s it was AMAZING. Somebody is going to appreciate what it is and it should be marketed accordingly. Those people should get more than just lot value for their home. Here’s the thing though. Their prospect base is limited now due to the improvements they made which will take them longer to sell.

It’s important to intimately understand property values in your neighborhood and how they pertain to your property. This intelligence goes way further than just knowing the price your neighbor’s home brought. What can be accomplished with a water view may not be accomplished with a preserve view. What can be accomplished with an interior lot could fully fail on a lot that backs up to a busy thoroughfare. These factors matter.

If you want to stay relevant and protect your interest. Call me. I will tell you if it’s time to remodel, wiser to tear down or perhaps the best plan is to enjoy it as is until you’re ready to sell if you think you’re going to be ready in the short term.

Buying An Older Home?

Do it with an agent who knows how to protect your interest! I see sales every day in MLS and think, “oh dear…that buyer is going to be seriously disappointed when they sell.”

A few months ago I spent an enormous amount of time talking to a homeowner in Old Naples. He made the terrible mistake of buying a bad home in Old Naples the year before. Everybody he knew told him not to buy the home. He was emotionally grappling with whether or not he should spend an enormous amount of money to fix it up or sell it in original condition. Not to be crass but the house was a pig. There was no way one could make it right without tearing it down. The floor plan was a disaster, the condition was a disaster…not to mention the deal was a disaster. Don’t put lipstick on a pig. My suggestion was to sell it in the current condition as fast as possible. Had he been my buyer originally, I feel pretty confident I could’ve talked him out of it.

The record-breaking time on talking somebody OUT of buying a property took 45 minutes. Ultimately the conversation went something like this:

Look, you’ve hired me to help you buy a property that had these 5 factors. Once you buy this (for more than it’s worth) spend “x” ( a ton more money) on making it right, in 2 years you’re still going to have this amazing property that doesn’t have the #1 thing you requested. So basically, I’m your “best man”. You’re asking me to be a signor on your wedding certificate stating I think this is a solid relationship. The problem is your bride is a disaster. She’s high maintenance, she’s going to take all of your money and she’s going to break your heart. Then you’re going to leave half with her when you divorce. You are headed for a messy divorce unless I talk you into NOT walking down the aisle.

He ended up with a beautiful “bride” and they’re still tiptoeing through the tulips. Hahaha.

It takes me no time at all to learn your objective. Your choices are your choices but at least with me, you’ll have some solid direction and you’ll always know what you’re getting into.

Developer Insight

If you’re looking for a great project around town, there are enormous opportunities. I have AMAZING ideas for you. I know what buyers want, need and even have valuable insight into something that could be acquired right now. Give me a call!

Ok friends, this concludes my latest insight on building, remodeling, holding and walking away without doing anything. If you have questions or want to buy or sell Naples real estate, give me a jingle!

Best Regards,

Shannon Lefevre, PA
Your Naples Smart Girl!