Do Costs Always Equal Value?

By
Real Estate Appraiser with Reliable Appraisal
As the real estate market takes a course correction homeowners are realizing that their home improvement costs are not always reflected in  the value of their home..   Generally speaking,  remodeling a kitchen or bathroom may bring the greatest return on a homeowners investment.  However, some custom improvements can actually detract from the value. These are known as "over-improvements."

What advice can we share with our clients?
  • Understanding the profile of new buyers in the neighborhood
  • Understanding which improvements have the greatest influence on property value
  • Avoid over-improvement by sticking to what's standard in the neighborhood
  • Consult a real estate appraiser to predict the cost to value considerations

I am certain that you have had to deal with clients with unreasonable expectations when they understand that their improvement costs were not directly reflected in their listing and/or selling price..

-Meg 

 

 

Comments (5)

Tom Burris
NMLS# 335055 - Baton Rouge, LA
Texas/Louisiana Mortgage Pro - 13 YRS Experience

You know... a consultation with an appraiser would be well worth the money. And a needed service!!! Hint, Hint.

Do you offer this service? What are the costs....?

I could make you my guest writer of the month on my outside blog with good info like this!!

Nov 21, 2007 01:35 AM
Alix Pinzon
Open Mortgage, LLC NMLS # 2975 - Downey, CA
(562)743-6086

As you know, the spirit of Active Rain is to help each other.  The best way that I've found is by hitting each others' website, to improve internet search rankings.  I checked out your website, and I liked tudor looking home that you have on there.  I like your blogs too!  If you have a second, please reciprocate the favor by checking out my website at http://www.southerncaliforniaappraisers.net/

Jan 07, 2008 04:55 PM
Benjamin Smith
Apex Appraisals & Consulting - Powder Springs, GA
Atlanta Area Appraiser
I see the mess this creates all the time. One of my favorite stories was a lady that spent $70,000 remodeling her kitchen. This was in an area of higher end homes to begin with and the house was only 5 years old. I told her that the kitchen was very nice but the cost would not translate to value. After reviewing other homes in the development, I figure the kitchen she ripped out probably costs around $40-50,000. It probably would have been very beneficial for her to call me first before going through with it.
Jan 13, 2008 02:29 AM
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

I think the worst I've seen is a home I'd sold 6 months earlier.  The market was beginning to trend down when the family bought it, and they got a great deal.  When I interviewed for the listing, SIX MONTHS LATER, the husband pointed out a POT RACK  in the kitchen and a single RECESSED LIGHT he'd put in the laundry room.  He expected to get $50,000 more than what he'd paid six months earlier in a down market.

It's all about emotions.  Untangle those webs and you'll really be getting somewhere. 

Jan 13, 2008 02:39 AM
Sara Goodwin
Ashcroft & Associates - Portland, OR
Portland, Oregon Appraiser

Hey Meg -

I like to point out this site to people that question cost verses value on home remodeling. I don't think it's 100% accurate and it seems like the material and labor costs are at top dollar, but at least a consumer can put their own labor/material cost in the grid and get an idea... .

Feb 08, 2008 09:01 AM