If you have a first-time buyer who wants a fixer-upper because he's handy, you're lucky. Buyers, say many Realtors, are shying away from the large housing stock of older homes that need work, which is bad news for sellers. They want to buy a home that is "already done." Sellers don't want to remodel a home they aren't going to get to enjoy, and they tend to believe that any remodeling money they spend should be recouped in the price of the home.

An older home with no updates looks more obsolete compared to other homes and its sales price could suffer accordingly. Yet homeowners, according to annual data compiled by Remodeling Magazine, seldom get 100 percent of the cost of improvements back when they sell, and usually net only a fraction. Buyers are increasingly reluctant to pay sellers to squat on the land without adding value to the home, except in extreme cases of economic and housing booms.

This clash of entitlement attitudes creates a conundrum for the real estate professional. If other homes in the neighborhood haven't been updated, the homeowner may be reluctant to be a pioneer. If other homes have been updated, the home without updates may rise with property values, but not at the same rate as improved or replaced homes, which can only be proven by comparables.

The median home in the U.S., according to the American Housing Survey for the United States: 2001, U.S. Census Bureau was built in 1969, with the largest bulk of homes built between 1950 and 1969. These are also the homes with the most severe to moderate physical problems for which the average age of homes with problems was 1956 and 1955 respectively.

The closer a buyer wants to live in the core community, the more likely he or she is to run into older housing inventory. New homes are being built with the amenities that buyers want, yet buyers may have long commute times and pay significantly more for the home, despite lower land costs than in-town, to get what they want.

Here's some insight into why old housing that needs updating isn't necessarily a good thing for buyers or sellers:

Expense: Homeowners spent $83 billion on home remodeling last year with the average kitchen at about $25,000. Remodeling, like new home sales, is setting records all over the country, but if the land value has already escalated, then a buyer may be reluctant to pay more for the land and make improvements at the same time unless he or she can see a strong trend of home price escalation in the area. At the same time, older homeowners, content with the floorplans and appliances they've had in place may be in for a shock when they realize that homebuyers have a different standard.

No time: Study material from the National Association of HomeBuilders suggests that GenXers are setting records for home remodeling projects but they aren't necessarily doing the work themselves. They are hiring contractors to do the work, which raises the costs of remodeling. This may be one reason why buyers prefer to have the seller update the home and incur the time, inconvenience and liability associated with repairs and updates.

Environmental issues: Many sellers use places like Home Depot to replace old flooring, but when they buy the floor, they learn that Home Depot won't tear out the old linoleum because of liabilities associated with asbestos. The seller can either find another company to tear out the old floor or have the new floor laid down on top of the old. If the floor has never been taken up, the seller may or may not know there might be asbestos underneath. Buyers are faced with living with the floors as they are or opening a can of worms to get them replaced.

Code issues: Most roofs have an overlay - composition on composition, but building codes won't allow that anymore, which means that if your buyer or seller has to replace a roof, they may be facing additional costs for removal. In addition, as the buyer trails around the home inspector and finds items like gas wall heaters with no vents and clothes dryers that vent into the crawlspace instead of to an outside wall, the buyer may well wonder what else isn't built right. A sellers' inspection can go a long way toward explaining to sellers what is reasonable to fix and what isn't which can assist in alleviating buyers' fears.

Obsolescence: Some items can't be fixed without major remodeling: According to the NAHB, homeowners are getting rid of living rooms and expanding the kitchen where they can entertain and remain with the family during meal preparation because time is so limited. A home has to have space for expansion such as the master suite with walk-in closets and his and hers baths. In other words, lifestyle dictates what buyers want.

Expectations: Approximately one in five homes sold yearly is "new," which means all the others sold are in the resale category. With every year, these newly built homes that are no longer new are added to the inventory of existing homes. While most buyers are buying existing homes, they want to get as close to "new" as possible because these homes are more likely to be built with modern tastes and amenities in mind, which means the buyer is more likely to "punish" a much older home with unreasonable expectations of how the home should perform. If a seller has only been in the home a short time, he or she is more likely to agree with the attitudes of buyer and may have done some updates upon move-in or may be more willing to do extensive updates to find a buyer, unless equity positions prevent them from doing so.

New is cheap: New homes are typically more feature-rich and larger for only $20,000 to $25,000 more than comparable older homes, at a cost of only about 12 percent more to have the latest in home design, materials and technologies.

According to the NAHB, the difference between an average home and an upscale home is size and quality. A buyer may be more willing to buy an older, smaller home, if amenities found in more expensive homes such as hardwood floors, fireplaces, and island kitchens are in place.

A solution might be to encourage sellers to do as many updates as reasonably possible to keep resale prices up in local neighborhoods and for buyers to be encouraged to update as soon as they are able, even to the point of including remodeling or expansion costs into their loans. Otherwise, real estate professionals could be looking at neighborhoods that are declining, as homes without updates have no alternative but to face a lot-value future.

One way to do that is to have a list of contractors, handypersons, artisans, roofers, plumbers, and other reasonably priced and reliable sources that can be recommended to both buyers and sellers. Another way to reassure buyers and sellers is be a frequent buyer and seller yourself, with experience under your belt as a remodeler. You'll be a lot more likely to know what current buyers want and what it takes to get a home ready for sale that will not only fetch top dollar, but keep the neighborhood desirable as well.

Published: April 6, 2004

Use of this article without permission is a violation of federal copyright laws.

Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.