I have a seller who is adamant about the "$50,000" she put into the home-- although my calculations put it more around $15,000. She bought the home for 210,000 four years ago and thinks the 50,000 should add a lot to the asking price... how do you explain it doesn't work like that to your clients?
show them the comparables..take her to see available listings..
Michael has it right. You should never expect a dollar for dollar recoup on improvements. Improve because you want to but it is not an even trade!
First, you could start with her purchase price and what ahe got for her money. Was the property distressed or dated? Did she get it at a bargain for that price? If so, her expenditure may merely have brought the property up to neighborhood standards. If not it might represent normal maintenance like new appliances, new roof, new siding, etc which might not be considered improvements as much as merely maintaining the property value. Was some of the money cosmetic like painting, new carpeting, window treatments? Those lose value over time because they become worn or dated. Adding air conditioning where there was none, a garage instead of a car port, a deck or patio, finishing a basement or completely remodeling a kitchen are improvements that will upgrade a home but even these don't translate into a 1 to 1 investment. There are sites that publish stats on this that you could show her. Good luck with delivering the reality check.
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