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I had my house appraised recently for a HELOC, and I wanted to ask those here who are more experienced with that process if I did what I should have to maximize the appraised value.
While the lady was looking around the house, she asked about some of the changes I've made. I've lived in this house for ten years and have done a fair bit of renovation. She asked how much each of the changes had cost, and I was honest about it. The structural changes have all been permitted and I contracted for the work, so that work included the value of labor. I didn't figure in any labor for the stuff I've done myself, though, and now I'm wondering if that will make a difference in the final figure.
For instance, I completely renovated the kitchen, taking out everything to the bare walls, floor, and ceiling. I put in some nice stuff, but the total cost was only $6,500. If I'd had that done by a contractor, it'd've cost twice or three times that much. I've installed tile throughout and other stuff like that, so now that the appraisal is done I'm wondering if I should have given her numbers that included an estimate of labor cost. What do you guys think?
Aloha pumehana,
Brian and Mary
Lynnwood, WA\Discovery Harbour
Aloha pumehana,
Brian and Mary
Lynnwood, WA\Discovery Harbour
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It probably doesn't matter since the appraisal is based on the comparable houses sold in the subdivision and not on the replacement value. While the appraiser will make adjustments for those extras, those adjustments rarely even cover the cost.
Aloha,
John S. Rabi, GM,ARB,BFT,CM,CBR,FHS,PB,RB
808.989.1314
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Typically Tropical Properties
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I appreciate what you're saying, John, but I've heard so often that you recoup a certain percentage of the cost of property upgrades and that can mean significant money. For instance, if I've completely remodeled the kitchen and master bathroom at a cost of $10,000 and done all the work myself, would my neighbor get a better return-on-investment if they paid a contractor? The difference in labor could be upwards of $15,000.
Aloha pumehana,
Brian and Mary
Lynnwood, WA\Discovery Harbour
Aloha pumehana,
Brian and Mary
Lynnwood, WA\Discovery Harbour
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if an appraiser looked at comps and saw property that was similar but not updated like your kitchen i would think that they would come up with values that they feel are typical in your area as a average and maybe take the estimates into account, but its more a personal judgement on their part....ie new ktichen upgrade 4,000....new kitchen remodel $10,000
noel
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Noel is correct, the adjustment is a value in difference between a kitchen in a comparable house and the kitchen in your house. It is not the value you spent on the kitchen, which might include even the removal of the old stuff. In addition, please take into consideration the fact that not all upgrades costs can be "recovered" and some actually will affect the property in a negative way. (Like a swimming pool. The value will go up less than the cost of the swimming pool.)
Aloha,
John S. Rabi, GM,ARB,BFT,CM,CBR,FHS,PB,RB
808.989.1314
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Typically Tropical Properties
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Okay, that's new information for me, and this is way contrary to what I had assumed. The HGTV programs that my wife watches all imply that the increased value is directly related to what you've spent, and never mention that the value is based on a comparison of a similar home. Those are two separate perspectives. Thanks for the education, John and Noel.
Aloha pumehana,
Brian and Mary
Lynnwood, WA\Discovery Harbour
Aloha pumehana,
Brian and Mary
Lynnwood, WA\Discovery Harbour
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Those shows also show programs where people spend money on improvements that do not raise the value to the amount they spent. The key is to listen to what the real estate agent is saying versus the final "I would list your house at". The $20,000 swiming pool may have only netted $10,000 in value, but the $10,000 basement conversion could have raked in $40,000 in addes value.
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Right on Bob, right on!
Aloha,
John S. Rabi, GM,ARB,BFT,CM,CBR,FHS,PB,RB
808.989.1314
http://www.JohnRabi.com
Typically Tropical Properties
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quote:
Originally posted by KathyH
For example on our old house in California (in 1998, on a refi) he bumped the house up 50,000 after hearing my explanation of just what was involved with the garden (the garden ultimately sold the house for an extra 100,000, so it was reasonable.)
Wow! What on earth did you do in the landscaping that accounted for such a difference?
Aloha pumehana,
Brian and Mary
Lynnwood, WA\Discovery Harbour
Aloha pumehana,
Brian and Mary
Lynnwood, WA\Discovery Harbour
Posts: 2,314
Threads: 59
Joined: Jun 2003
quote:
Originally posted by Fishboy
Wow! What on earth did you do in the landscaping that accounted for such a difference?[/quote]
What?! You never heard of a pakalolo farm?! [  ]
Aloha,
John S. Rabi, GM,ARB,BFT,CM,CBR,FHS,PB,RB
808.989.1314
http://www.JohnRabi.com
Typically Tropical Properties
"The Next Level of Service!"
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