We answered this question after the sale of our first house (spoiler: we bought in the bubble and sold in the recession), so now we’re back to do it again – but this time the coins stacked a bit more favorably, thanks both to selling in a slightly better market and by not sinking as much into this house’s improvements (it helped that we didn’t need expensive upgrades like a new roof and windows this time around).
We managed to sell this latest house for $23,000 more than we bought it for back in 2010. And our best estimate is that we put around $14,500 into improvements that stay with the house (i.e. not furniture or other decor that moves with us). That means we made a net gain of about $8,500. Here’s an estimated breakdown of where the money went:
- Kitchen renovation (including appliances, new flooring, backsplash, lighting, counters, opening the wall, etc): $6,955
- Deck building/staining/sealing: $1,783
- New patio: $1,252
- Built-in desk in the office (it conveys with the house since it was custom-built for that area): $124
- Laundry appliances & built-in shelves: $712
- Hall bathroom update: $168
- Guest bathroom update: $51
- Crown molding that we added throughout the house: $218
- Fireplace upgrade with new tile/mantel: $147
- Board & batten in hallway: $57
- Pergola over carport: $214
- Column update for porch: $198
- Window boxes/plants for them: $132
- Paint/stain for every room, built-in, and outdoor area (this doesn’t include furniture paint/stain since that comes with us): $800
- Landscaping, light fixtures, curtains, and miscellaneous other items that stay (like new border tile & toilet in the main bath): $1,700
- Total: $14,511*
*some of these prices are total costs for projects, including some items that won’t convey with the house – for example the bathroom makeover costs include art and accessories that came with us. So this isn’t a perfect tally.
But regardless of how meticulous our math is, we’re incredibly grateful that in just a few years we were able to increase the value of this house so much – especially given our experience with our first house (to which we barely boosted the sale price at all – stupid market!). But of course, we owe a 3% fee at closing to pay the buyer’s agent commission (but we would have owed twice that amount if we used a seller’s agent, so we’re thankful for that as well).
In the end, we probably broke about even on this house. House flippers we’re not. But house lovers? You betcha. The thing we’re most excited about is finally getting to roll all of the equity that we’ve built over seven years of paying the mortgage on our first two homes into this new house – nearly cutting our mortgage balance in half. Yeehaw! That was definitely worth the wait.
What about you guys? Have you added up what you’ve spent on a house and compared it to what you got back? We always hear kitchens, bathrooms, and outdoor “square footage” (decks, patios, etc) tend to up the resale value of a house. Has that rung true for you? One thing we haven’t really heard much about are built-ins, but we think they’re such a nice feature (like the built-in desk we made for the office, the ones in the dining room that we inherited, and the one that we added to the laundry room).
So built-ins will definitely be making an appearance at the new house (especially since we’re already starting to notice a lack of built-in storage here). They add a nice feeling of function + customization, and both of the built-ins that we added were under $125, so that’s definitely some nice bang for your buck!
Fi says
I bought my first house on my own 8 years ago and renovated it completely including taking out walls, new kitchen, bathroom, paint, window furnishings, sand and polished floorboards, new gardens and painted the outside. I sold it after 5 years (3 years ago just before the market here in Australia came to a halt) and managed to make over $100k profit. I was amazed, because like you I had renovated much of the house for myself, with no real plan to sell so quickly. But then I met my Prince Charming and we decided to sell and reinvest in another property. So now we are starting a new reno including kitchen and bathroom on a holiday house at the beach which we let out as well. This time we’re on a strict budget and the plan is not to sell however we do want to see an increase in value. Your blog has been an absolute inspiration on the DIY side which I wasn’t ready to tackle on my own time (we’re planning on doing a new kitchen and bathroom ourselves!!!).
Julia says
I’m enjoying reading all the comments about mortgages. Can I tell you guys a secret? My husband and I paid off our mortgage a few months ago! It was thrilling, especially since we did it in just under 12 years. For us, instead of overpaying every month, it was advantageous to save up all the extra cash. It was sort of like a giant rainy day fund that allowed me to have peace of mind to take a few years off from work to take care of the kids. Once I went back to work and when we had enough saved, we wrote out the big check. The actual process was kind of anticlimatic though. We went into the bank, were told that we didnt even need to sit down at the desks, instead we just handed a big fat check to one of the tellers and got a tiny receipt. The funny part is that after years and years of saving, I fully expected celebratory balloons to fall from the bank’s ceiling.
YoungHouseLove says
That’s amazing!! Must have felt SO GOOD! And where were those balloons?!?!
xo
s
Camille says
I think the fact that you rolled so much equity into the new home is a huuuuuge sign of success. I completely agree that you can’t take your exact profit amount and use that as a symbol of success or failure. I live in an expensive southern California suburb and I can honestly attest that your new house, in its current state of ‘lovely,’ would sell for at least 1 million….and up to 1.3 or 1.4 depending on the neighborhood. Sounds like your new neighborhood is awesome :) The amount of land you have would not even be part of the equation….this is California, after all. And being able to decrease your mortgage at all, from one sale to the next, is unheard of among my group of homeowning friends! I say, Go Petersiks!
Like the other commenter who said she had to stop watching House Hunters, I totally get it. When they’re hemming and hawing over a fabulous house that’s 3,000 over their budget I want to scream!
Amanda Hewitt says
Profits rule!!! Our first home (bought in 2004) we added a built in bench area inthe kitchen, beadboard wainscotting in the bathrooms, extra storage in the closets, a deck, and small patio area….and we made 54k on that when we sold in 2007! I was shocked, but delighted! Our next home we lived in for 2 years and really did very little to. Steps from the back deck to the yard, some color changes, deck staining, and some landscaping. We sold in 2009 and made only 8k, but we also sold in 8 days! In rural Indiana! I was shocked again! Good for you guys….taking a chunk off the mortgage is always nice!
Janet G says
Maybe I missed it somewhere, but where do the new french doors that open onto the deck fit into this breakdown? Thanks.
YoungHouseLove says
Ack, I knew we’d forget something!
xo
s
Paula says
It’s so interesting to see all the different markets – here in Sydney Australia you would be lucky to find a one bedroom apartment in the outer suburbs for $300,000. We bought our 100+ y o house 20 years ago for about $300k, we’ve spent probably about $300k on it, but it would be worth around $1.2m. Which is nice for us, but not so great for our kids, who will have to buy in a similar market ….
mp says
I have to admit I look at the profit/loss situation differently. I sold my first house in southern Chesterfield after 10 years of ownership and a year after investing $15K in major improvements — new roof, HVAC and siding — as well as paying two real estate agents, and walked away with $34K. I didn’t subtract the money I’d spent on various updates & repairs over the years, because I considered them part & parcel of owning a home, and as an agent once said on HGTV, some items are just maintenance, not improvement. I also hadn’t planned to sell when I made the improvements, but then again I hadn’t planned on getting married, either. In my current house, I’ve invested around $30K, but the house was unlivable when I bought it (no HVAC, unsanded/unfinished wood floors) and I realize that, if I sold it now, it probably wouldn’t move fast or sell for enough $$ to make the same profit. I’ve been here seven years, but of course the recession changed everything, plus I moved to a much less populated area. At any rate, what I’m trying to say is that, although you only made $5K more on your first house and put in around $35K, those improvements greatly improved the quality of your lives, and had you not made them, you’d have been miserable (and in the case of the roof, have further damaged the structure, which would have lowered the value of the home to the point where you’d have had to show up with money at closing). A friend of mine lost $25K on a house she and hubby bought in Atlanta, but they were just glad to be rid of the second mortgage after having relocated to South Carolina — and considering that another friend had to turn his house over to the bank after having it sit empty for four years after he moved for a job, I tend to agree with them.
YoungHouseLove says
Great points MP! And I can totally see how at some point you just want to relocate/sell, so even losing 25K can be a fair trade to live in a place that makes you happy! SC is pretty much my favorite state ever.
xo
s
LMN says
I’ve lived in SC my whole life. Why is it your fav state? We’ve lived in the mountains, midlands, and the coast (our beaches are the best!) But I also can’t wait until my husband is finished with his 2nd career as a phd student and we can can give another state a shot :-)
YoungHouseLove says
Growing up I went to Hilton Head every summer (with my friend’s family) and the climate and terrain was gorgeous to me. I was smitten and still am!
xo
s
mp says
LMN, I love SC too. My parents were raised there and moved to Virginia right after marrying, so I was born here. But I attended grad school at USC-Columbia and fell totally in love with the town. So much cleaner and a lot more intellectual than Richmond was in 1992. Of course, Richmond has come a long way since then, and I still have friends I visit regularly (like the one who relocated from Atlanta).
LMN says
My husband and I bought our first house near Hilton Head! It’s impossible not to love it there :-)
Lolo says
We bought our first house (in the SF Bay Area) 7 months ago for $505K and immediately had to put in $60K to make it liveable (it had already appraised at $560 for the purchase though). We are hoping to refi already, and our agent guesses it should appraise at $615K at least.
So you are right: big gains in a market like ours, but on the other hand we are in our mid-40s and just bought our first house (and trying to fix it up with two full-time jobs and two 5-year-olds = haven’t painted or fully unpacked!).
Without the recession slashing prices we never could have done it. In parts of the Bay Area (not ours), prices are already back to or above their 2006/7 height. Crazy.
YoungHouseLove says
Wow, that’s crazy!
xo
s
Kate in New Zealand says
Hi guys!
Just wondering, did you weigh up the cost of a quick sale at a lower price vs holding out for a higher price, due to the fact that you were paying two mortgages?
Very cute that Clara’s playhouse now resembles her real house :)
Btw the next book tour needs to be international!
YoungHouseLove says
Good question! We thought long and hard about pricing the house because we know that a too-high price can leave a house sitting on the market and something too low might make us have regrets. In the end we got a really strong offer that was just 2K under our asking price (they were willing to put a large percentage of cash down, which was great since we worried less about the loan falling through at closing). Then we just had to worry about if the house would appraise for that price (it was higher than any other house in our neighborhood) so we were SO GRATEFUL when it did! We’re really happy about the price & the quick sale :)
xo
s
Dani says
We brought our house for $180,000 in 2008.
We’ve spend about $60,000 on it (-oops-)
Hoping to sell for about $250,000 at the end of this year.
So not a great deal of profit, but it was a good learning curve and the house did its job for us for 6yrs (by the time we go). And next we’ll be building our very own brand new house (which is sooo much scarier than buying a run down crappy old one lol).
Jennifer says
I love the math! I’m always doing it in my head every time we make an improvement. I know our newest project is going to send us over the edge of over-improving, but after thinking on it I figured what I’m going to lose in this project I’d lose in closing costs on a new house. So, it equals out. I think my husband was disappointed because he wanted to move, lol.
maggie says
Forgive me for the stupidity: can you explain a bit more how you had equity to put into the new house if you didn’t really make much on the previous two? I ask not to be nosy or rude, but because your model seems to be really working out and I’d love to know more about it!
maggie says
Sorry–I see you answered this elsewhere. I feel ridiculously dumb for not knowing this is how it worked. I just assumed that if you pay, say, $150,000 for a house and sell it for $160,000, you take $10,000 to the next house. I’m too old to be this out of the loop on the real world! And this, my friends, is why I rent.
YoungHouseLove says
No worries Maggie :)
xo
s
Zoe says
well done to you guys!!
I just cant get over how cheap houses are where you live!! Your house is fab and I cant believe it sold for somewhere in the 3XX,XXX’s!
I live in Sydney, Australia and a place like yours would be between 700,000- to 1 million easy – depending where it was.
Our first (and only house) was 1 million dollars. And we a’nt rich!! It is just what you have to pay!
*considering moving to Richmond and learning how to say Y’all instead of G’day!” LOL
YoungHouseLove says
Haha, come on down! I’ll hop around like a kangaroo if that helps..,
xo
s
Koliti says
Congratulations on coming out on top with your home sale.
Since you’ve lived in the house for a period of time, like 3 years, does that mean there were no capital gains tax and all the proceeds (your nest egg of equity) can be rolled into the new house? Whereas “house flippers” would have no equity and a totally different tax situation?
All of this mortgage talk is like learning a different lingo. Whew. I need a nap :)
YoungHouseLove says
Yup, I think in our area as long as you’re in a house over 1.5 years (maybe 2 years?) there are no capital gains taxes, so we got to roll everything over into the new house :)
xo
s
anna says
bearing in mind that the western australian housing market is COMPLETELY different from the american… (actually, it’s just *everything* that’s more expensive here – a quarter pound punnet of raspberries is $10)
we built our first house, then bought an established house just at the end of the 2006 boom, put our first house on the market and… nothing. it sat there for six months. we “lost” 50k on the sale – although i’m now far enough removed from it that i can see we didn’t lose anything. the boom meant that our equity was waaaaay up, and while we didn’t get double what our (no-deposit-required) mortgage was, uh, we did okay, and it’s put us in a very, very, very good position now.
when we sold our second house (just a couple of months ago), it was after putting in a new bathroom (structurally necessary) and a new fence, dishwasher, and a few other bits and pieces. we made it all back plus a bit more – we got 30k more than we expected after a valuation six months earlier, and the house sold in THREE DAYS before an official showing. (that’s still rather rare here. most take a fortnight or so.)
we’re now in another new build so not so much repairs as making-it-a-home improvements to be done. (the sand! THE SAAAAAND!)
i’m curious about the buyer’s agent thing – do all buyers use an agent over there?
anyway – congratulations! sometimes happiness is the best indicator of a good deal. :D
YoungHouseLove says
That’s amazing Anna! And yes, most buyers use an agent here since it’s free to them (sellers typically pay 3% for them for bringing them the sale).
xo
s
Joanna says
You know what…. regardless of the actual profit you guys noted above, being able to buy a better house in a more desirable area for a LOWER mortgage sure sounds like a win to me!!
(Plus all of us blog readers are practically salivating at the thought of all those tasty new DIY projects that you will be tackling!!)
Autumn Beach says
First of all, I think it’s extremely generous of you guys to share all of these details. So, thanks for the privileged info! I really admire all of the wise and frugal decisions you have made along the way. Your wisdom and hard work have certainly paid off!
And yes…built-ins. Love them! They are SO underrated. I had a nice, long wall just begging for some. Alas, the hubs was not down with the idea. So, I came up with what I call my poor man’s version of built-ins. I found a relatively inexpensive media cabinet with a sleek profile which allowed me to buy FOUR of them and line them up side by side for a built-in effect!
Cathi S. says
Congrats on the sale! We sold our house July 2012 after being the 1st owners and living there for 17 years. The last 5 or 7 we made lots of upgrades, some with sweat equity and some bigger, like a minimal kitchen redo. The biggest one was, knowing we were within a year of selling, upgrading the master bath and guest bath. We were able to enjoy it for a year and half, got every dollar back, and then some. We gave a gift to the whole neighborhood with this great new comp!
Well, we sold our house in 2 DAYS for $25k more than we ever thought we would get. Our house was spotlessly clean, but I’m certain that the bath and kitchen upgrades did it. We were very grateful and still enjoying our new home.
YoungHouseLove says
That’s awesome!
xo,
s
Val says
You guys have done an amazing job with this house. All the photos look amazing.
Penny Smith says
You have to leave w/d there? Rarely is the w/d included here… Would be nice in a case like your I guess!!
So are you doing a smaller term loan like a 15 with this house? We paid our house off and it is still a lil surreal… Though between taxes and everything else, we aren’t “rolling in it” like we thought we would be, but definately more comfortable!!
YoungHouseLove says
It sounds like it’s a regional thing, but here they usually convey with the house, especially if you’re selling a turn-key house that’s “move in ready” (folks truly want it to be ready to go when they get there). And yes, we have a 15 year loan on the new house. Wahoo! It’s amazing you were able to pay off your house Penny – congrats!
xo
s
Rose says
Great post and it really is interesting to see what your numbers were. Glad you made a LITTLE sumthin’! :) We moved from an absolutely horrible market to a rebounding one. It took us a staggering 15 months to sell, despite the fact our house was in perfect shape, and everyone loved it. But with foreclosures and abandoned homes (in a very good neighborhood!), we just took a bath. (Admittedly less of a bath since we are DIYers too.) With the new house, we are way more cautious about what we are putting into it, and landscaping will be the biggest cut. We found it did not make one bit of difference in PRICE that our yard had wonderful hardscape features, trees, perennials, people truly looked at square footage and compared the price with the foreclosures….period…. I do think the yard helped to sell the house eventually, because it looked great. Money wise…we would have been better off to stick to regular landscaping. But I am a gardener at heart, so it was/will be hard! And DIY is the name of the game here too…from learning to drywall again to painting everything ourselves, we are looking to make a new house a home. And your blog and book sure help me keep things more current, more ‘on trend’…love that, and makes me feel younger too! (And then I stand up and hear the bones crack…..) Congrats on your move!!!
Larissa says
This post and comments were helpful and fascinating! They sparked a great conversation between my husband and me about buying a house in the near future. With a 2 year old and a 10 month old great conversations with the husband are few and far between. So thanks for the info and the marriage boost! :)
YoungHouseLove says
Aw, so glad!
xo
s
Sharon T-B says
Thank you so much for sharing the details! We are in escrow on our first house right now and I am trying to get up to speed as fast as possible with everything home buying! The discussion around equity was very helpful since I hadn’t really thought ahead to purchasing a 2nd home one day.
From the perspective of a recent buyer, here are my thoughts on upgrades. The house we are in contract on had a lot of renovations done. A few of the improvements were clearly DIYed and there were issues with how they were done that showed up in inspection. If you are going to DIY, it’s important to make sure your work is up to the most recent codes and standards.
The current owners also did a complete redo of all of the electrical (the house was built in 1957) with a licensed electrician. I haven’t seen this upgrade anywhere else and it meant a lot to us! YAY for grounded three pronged outlets in a 1950’s home! And for a much safer home! I have no idea what it cost them.
When we move in we hope to put our money into landscaping and adding square footage.
Peggy McKee says
You mentioned that you are putting all the repaid principal (your equity)from your two previous houses as a down payment on the new house–thus reducing your mortgage balance.
If, in addition to your monthly mortgage payment, you made an additional payment towards principal, you will reduce your balance even more quickly. The “trick” is to be sure the bank credits the extra payment as “repayment of principal” (not payment of interest).
This idea isn’t very popular at the moment because mortgage interest rates are low, but unless you really are putting the extra money into the stock market, prepaying your mortgage is actually a very good and extremely safe investment.
YoungHouseLove says
Oh yes, we do put our over-payments just towards the principal (we just have to write “for principal” on the check or check that box when we submit an overpayment online) – love that trick! :)
xo
s
Andrea says
Sounds like you are doing pretty well to me with selling your homes. We put over $40,000 into our house for huge repairs – new heating, new roof, new windows, deleaded, new carpet, new paint, many new appliances, etc. You know where we are? We still aren’t able to sell the damn thing. It was priced to sell at about $30,000 less than we bought it, and that’s even after we did all those repairs. This is why I cringe when I hear people still want to buy homes. No no no no no! Buying a home in 2007 when we were 21 years old was our biggest mistake.
We are currently renting our place. And guess what’s happening? My beautiful home is being trashed by tenants. Tenants who we had to evict because they didn’t pay rent. Property managers don’t take care of anything and leave the place in shambles! It is a sad story indeed. What once was a happy place for my husband and I is now just a rental property and a huge hassle.
YoungHouseLove says
Oh no! So sorry to hear that Andrea!
xo
s
Ruth says
Congrats! Last year, before the housing market started to climb, we sold a house in Indiana. We didn’t sell for as much as we paid, but in an extremely slow market, we considered ourselves lucky to have a buyer in less than 2 wees for the asking price. We were also fortunate that our previous sale had been an East Coast home during the bubble, so we’d started out in Indiana with quite a bit of equity–which meant we didn’t feel the pinch of selling for less quite so much. Then guess where we moved? Northern California, where the market is a tad bit different, to say the least. We had heart palpitations this February as we signed the paperwork on a home that was much small and much more expensive than our Indiana home. The good news? Thanks to California’s crazy real estate trends, our current home’s value has already increased more in the last 4 months than our Indiana home did in the last 4 years we owned it. It’s crazy how much location and timing affect home values.
YoungHouseLove says
Woah, that’s awesome Ruth! Congrats!
xo
s
Julia says
Would you guys be willing to share a little more about the purchase process after you had your offer accepted on the new house and how long it took (was the conveyancing and survey stage smooth for you)? Did you find it to be quicker as you didn’t use an agent to advertise with?
We had our offer accepted on our first home three weeks ago and we’re probably looking at another 10-12 weeks at least before we complete. It’s fairly standard to expect at least a 10-12 week wait to compete here in the UK, so i’d be interested to know how it compares in the USA.
YoungHouseLove says
I think things are typically faster here (either a 30 or 60 day closing is pretty common, so that’s the amount of time from the offer to closing). Our experience was we got an offer, they indicated what day they wanted to close on, they scheduled an inspection, that was completed, the bank came out and did an appraisal, it appraised for the sale price so everything was on track and their loan went through. Then it was closing. It was about 5 weeks total. Hope it helps!
xo
s
Karen Johnson says
Thanks for sharing these details (and keeping such good records!). Most of us usually don’t know what we really put into a house, when lots are little projects are involved. Glad you made some $ in these tough times!
Helen says
Hi! Thank you so much for this website. We had an offer accepted on the house of our dreams today and after the initial celebration now I’m horribly nervous about how we’re going to afford it! I love seeing how you transform things without spending a fortune and that will be especially important now! :-)
YoungHouseLove says
Congrats Helen! That’s so exciting! All the best with everything!
xo
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