How Much Would NOT Having a Kitchen Decrease a Property's Value?
I’m wondering, how much do you think that a house that was put on the market would suffer from not having a ready to cook kitchen? I’m not talking about no space for one, I’m talking about all the plumbing being roughed in, everything ready to go, but no finished cabinets, counter, sink, etc. I…
I’m wondering, how much do you think that a house that was put on the market would suffer from not having a ready to cook kitchen? I’m not talking about no space for one, I’m talking about all the plumbing being roughed in, everything ready to go, but no finished cabinets, counter, sink, etc. I understand for mortgage purposes, there has to be a sink, so a working sink, but basically nothing more than the bare minimum. I’m doing a renovation and I’m not thrilled with any of the cabinets that I’ve seen, I don’t have time to make any and I’d just as soon pass the savings along to the potential buyer, but not if it means I’ll leave too much money on the table. House is completely renovated (or will be), decent neighborhood, probably in the 1 to 1.25 million dollar range.
For many buyers, it is more difficult to buy a house with a kitchen that needs a total gut. This is because they buyer can get financing for the kitchen that is already finished, but might need to come up with hard cash for the reno or cross their fingers on a heloc (risky strategy).
If you spend $1mm on a house you could put down $200k, but then need another $100k for kitchen ($300k in cash needed). If you bought the place for say $1.1 with finished kitchen you only have to put down $220k.
You don’t want to mess it up but delivering nothing is going to dramatically change your pool of buyers.
The buyer will have a hard time getting a mortgage. It happened to me…
Our place had a “legal” kitchen, but functionally it was unusable. There was no question that it had to be gutted. For comps, there was a place that closed one block away 4 months after we bought our place that sold for $70k more than ours. The sq footage was almost exactly the same (I think our place was about 50 sq ft bigger), and for all intents and purposes, same neighborhood, access to transit, etc. The main difference was that the other place had a newly renovated kitchen, and a much nicer bathroom than our place.
We expected (and did pay less) because our place needed a lot of work, but it was not a deterrent. We had seen so many asshole kitchen renovations that we wanted a clean slate to start with. Of course after renovating for 9 months, we would walk past the other house that we had passed on, and see our neighbors all unpacked and moved in and enjoying their house while ours was still a war zone and question if we made the right decision… but that is a whole different discussion.
I would just chime in with the caveat about getting a mortgage. While our place did meet the legal definition of a kitchen, it took a huge hit during the appraisal because the condition and quality of the kitchen was so poor. We appraised about $500 over the contract price, which was pretty nerve wracking.
When I sold my GV one-bedroom 11 years ago, I gave the broker one of those IKEA computer-designed kitchen plans to show to potential buyers. It was from a renovation I never undertook — but I wanted people to see that the existing kitchen could easily become something much nicer. My broker said it made a big difference for the couple who ended up buying the place. So definitely think about investing in some nice plans or sketches.
What Adam said. You can buy a used stove. When we bought, our stoves were not hooked up, and one of the two kitchens was missing a fridge, but I don’t think the inspector noticed the stoves weren’t connected. In an unfinished kitchen, it would probably be more obvious.
Buyer won’t be able to get a mortgage.
There was a brownstone penthouse sold as needing a gut renovation recently where the broker arranged to have a general contractor or architect at the open house to discuss costs and potential with everyone. The house sold that day, I believe.
Your buyers will have a tough time getting a mortgage if you don’t have a working kitchen. At minimum you need a cheapo stove and sink. Also make sure that you don’t have any electrical wires hanging out of the walls. Put a face plate over them if you want to have the outlet for a microwave etc..
I see where you are going with letting a homebuyer pick their own cabinets and what not but you have to consider that you may also lose potential buyers that don’t want to be bothered finishing a kitchen.
Good Luck and let us know how what you decide.
Adam Dahill
adahill@wcslending.com
Tough call – it’s all in the marketing. I’d rather buy no kitchen than a butt ugly new kitchen that had to be ripped out, but that’s me. You may limit your buyer base because you will by definition eliminate the thousands of lazy buyers out there. In any event, you will have to cost out a reasonable mid-range setup (including installation) to establish the $$ value of no kitchen, and then negotiate around that number. You may be better off going the Ikea route.