Tuesday, August 18, 2009

What is an upgrade worth?

What's an upgrade worth???

I see builders advertising features about their homes, and I ask why they have added features that cost them money? For example, they offer a super-duper dishwasher, when they could buy the cheaper contractor dishwasher. Why?

Obviously, there is value to an "upgrade". There is a real value and a perceived value. The extra $50 spent on the dishwasher will add $200 to the asking price of the house. But who knows the perceived value. The home buyer sees this upgrade along with others and perceives that the builder is concerned about building a better house. When there's a decision between homes, the one with the better perception wins! And the builder knows that.

What's the difference in upgrading the hurricane and high-wind uplift protection with cable tie-downs. Is the thought that this is unseen so it's un-important. This is an added feature that the builder can use as an asset to the home. He could have installed a "good" system, but he installed the best system, Cable-tite. Chances are there are other "hidden" features to the construction that can also be mentioned.

Don't be afraid of costs. Features cost money. But they also reap rewards. Features add a ROI much greater than the cost, both in real dollars and in perceived value. Realtors tell me all the time that a home that is built better is easier to sell. Builders.....don't be afraid to build better than you need to.