I met a very nice couple over the weekend who had just bought their second home, a condominium, and were in the process of selling their brand new white appliances to replace with stainless steel equivalents. I can certainly understand when someone wants a certain brand or type of appliance or furniture to satisfy a particular need, perhaps for cool looks, image, brand name, acceptance, keeping up with the Jones’, resell value, or whatever that need may be. The topic here is the cost of the white appliances.
In the real estate business, I have heard people crudely refer to these updates as “lipstick and bows.” As someone gets ready to sell a house, the real estate agent or the owner updates some key elements with inexpensive replacements. They also paint and perhaps do a few small touches here and there so the property looks better and sells easier. The advertisement will have a few nice keywords like “brand new appliances, new kitchen, move-in condition, etc.” that may sound like music to buyers who do not want the hassle of dealing with replacements. Add to this a showing complete with chocolate chip cookies from the oven and you’ve almost sealed the deal. I hope that the couple I met did not fall into the “lipstick and bows” trap. I especially hope that when you are shopping for a house, you pay little or no attention to appliances or the paint. Appliances, paint and a whole bunch of other finishing touches are inexpensive to replace.
I would go as far as saying that you should be even more careful when buying an older home with very new finishing touches. Are the owners trying to mask a larger problem? Why would they go through the expense of these finishing touches if the house was a great deal? Are they trying to get more money for cheaper goods?
When looking at houses assuming you have passed the location check which is the most important, I would suggest you pay attention to the structural integrity of the building, roofing, siding, decking, foundation, every component in its plumbing, electrical, and HVAC systems. These are expensive to repair and replace. Everything else can be considered some degree of “lipstick and bows.” I have heard of few non-professional home buyers who look under the bathroom sink or check out the basement first. Even home inspectors often miss critical steps like opening a circuit breaker panel to check for proper grounding. In this process, you need to also assess if the seller is good quality seeker and conscientious homeowner.
Furthermore, if the building and its main systems are in good shape and worth buying, you should invest in a home inspection which will more than pay for itself during your price negotiation. Having newer appliances and newer looking home makes it more difficult to negotiate the price down. A condominium price is even harder to negotiate because it has fewer systems or elements that could be used during such a negotiation. Therefore, a newer looking condo with updated appliances is perhaps the hardest to negotiate down assuming the asking price is around the market value for its location.
Considering these factors, the appliances which were purchased for $1,200 (cheaper models) to make it easier to sell the property could end up costing as much as five to ten thousand dollars more in the house purchase price. Furthermore, replacing these with stainless steel equivalents (nicer models) will end up costing a few thousand more. I hope the couple I met did not fall for this and I hope you never fall for this either.