Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I bought my house (3 BR 1.5 BA 1960 rancher) in 2010 for $199,900 (with 9K back at closing) and it appraised at that value. Since then, I have completely renovated the (almost original) kitchen and bathroom. I know that updated kitchens and baths do help the home sell more quickly, and can supposedly recoup a large percentage of their costs back, but how does that relate to the appraised value?
As background info:
Prices have still dropped since I bought in '10.
Since March 2012, similar homes have sold for:
- $180,000
- $192,500
- $148,500 (some type of distress sale)
- $189,900
(The non-distress sales looked semi-updated but still dated.)
Five homes are for sale now:
- $169,900 (short sale)
- $219,900 (they are dreaming, based on the photos)
- $168,900 (I think short sale)
- $218,000 (updated bath, looks nice)
- $215,000 (expanded kitchen)
The number of homes in the neighborhood itself (that would be considered comps) is a couple hundred. It's a fairly stable neighborhood and not like we're overrun with foreclosures, but there are more sale signs and distress sales than I'd like to see.
If I were to sell my home (which I may have to do in the next year), I think I would be justified in pricing higher than the comps which haven't been updated (most of them), but do updates have any effect on the appraisal? Would the appraisal still be the same as when I bought it ($199K)? Could it have dropped based on the comps? What about the short sales -- do they factor into the comps?
I guess I was assuming I would at least get some "bang for the buck" (I know I'll get nowhere near what I paid), but I am concerned about the appraisal situation. I would appreciate any feedback from those who understand how all this works.
The prices of houses currently on the market are largely irrelevant.
The selling prices you've listed ARE relevant.
From what you've posted here, it doesn't look like you'll be making back any of what you paid for upgrades. In fact, it doesn't even look like you should expect to get what you originally paid, though it also doesn't look impossible.
The one thing I'd think you maybe have in your favor is that your house may sell quicker if your upgrades are good and you price the house in line with the comps (number of beds/baths/sq ft).
Pricing much above comps could leave your house sitting and not selling unless you get lucky and a cash buyer comes along who doesn't mind if the house appraises lower than sales price. Which isn't likely, but isn't impossible.
Best of luck to you!
__________________
When in doubt, check it out: FAQ
I have had two appraisals in the last 8 months. Both times the appraiser wanted to know all the updates that I had done so I assume it must have helped.
It helps to make a list of all the updates with the cost and the dates of the updates. Any information you can offer the appraiser that would make your house different or more valuable than other homes "may" help.
Don't make suggestions as to what the house should appraise for. Only give information that the appraiser may be able to use in doing the appraisal.
You can also list some recently sold (3-6 months) comps in your area that are like your home, and can point out the lack of updates in them.
It can and may help the appraiser make a more informed appraisal.
IF sold comps continue as you've shown, you'll be lucky to get a quicker sale than other properties for around what you paid, or perhaps less if the appraiser sees declining values in your neighborhood.
The prices of houses currently on the market are largely irrelevant.
The selling prices you've listed ARE relevant.
From what you've posted here, it doesn't look like you'll be making back any of what you paid for upgrades. In fact, it doesn't even look like you should expect to get what you originally paid, though it also doesn't look impossible.
The one thing I'd think you maybe have in your favor is that your house may sell quicker if your upgrades are good and you price the house in line with the comps (number of beds/baths/sq ft).
Pricing much above comps could leave your house sitting and not selling unless you get lucky and a cash buyer comes along who doesn't mind if the house appraises lower than sales price. Which isn't likely, but isn't impossible.
Best of luck to you!
Thanks for the feedback, everyone. Good advice about making a list of all updates for the appraiser.
I know the price of houses on the market are irrelevant as comps, but wouldn't they be relevant if I were setting a listing price on mine? In other words, if the two "nice" houses in my current competition are set at $218 and $219, why would I set my price significantly below that? Sure, it might sell more quickly if I had it priced at $190 or $195, but I wouldn't want to set it so low in relation to my competition that I lose out on ANY money, even if it's just a thousand bucks.
But if the appraisal could come in lower than my price, how would I know that in advance? Oyyy, this is so tough.
Thanks for the feedback, everyone. Good advice about making a list of all updates for the appraiser.
I know the price of houses on the market are irrelevant as comps, but wouldn't they be relevant if I were setting a listing price on mine? In other words, if the two "nice" houses in my current competition are set at $218 and $219, why would I set my price significantly below that? Sure, it might sell more quickly if I had it priced at $190 or $195, but I wouldn't want to set it so low in relation to my competition that I lose out on ANY money, even if it's just a thousand bucks.
But if the appraisal could come in lower than my price, how would I know that in advance? Oyyy, this is so tough.
The problem with your approach is that buyer's aren't coming up with a value based on those listings. They are using sold comps. If those listings are over priced they may sit for a very long time and if use them to justify your price you may sit right along with them.
The problem with your approach is that buyer's aren't coming up with a value based on those listings. They are using sold comps. If those listings are over priced they may sit for a very long time and if use them to justify your price you may sit right along with them.
Yeah....I guess deep-down, I know that. Well, I am hoping those houses sell as close to 200 as possible. If it gets much lower, I'll barely have enough to pay off the mortgage. Whoever said real estate has bottomed out doesn't live around here, as you can clearly see from my numbers.
Yeah....I guess deep-down, I know that. Well, I am hoping those houses sell as close to 200 as possible. If it gets much lower, I'll barely have enough to pay off the mortgage. Whoever said real estate has bottomed out doesn't live around here, as you can clearly see from my numbers.
Cross your fingers and hope they go under contract soon.
__________________
When in doubt, check it out: FAQ
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
