Raising The Value Tricks
Does anyone have any clever ways that they raise the appraisal value before resale. A couple cheap ways I was thinking was to add a carport or to add heat (just run an extra heating line) to a finished basement increasing the sq. footage of living space. I believe these would inexpensively raise the value. Anyone have any other ideas 
The best way to find out the tricks, is to talk to an appraiser. I'm considering taking a relatively inexpensive appraiser class, just for that purpose. I know that if you're retailing a house, kitchen and bathroom, and curb appeal are what sells it.
Exactly what I was thinking.Since my mother works in the accessors office I'm gonna ask her what some other quick ways to raise the value are. I'll let you know.
i look for "don't wanters" home that need cosmetic work but not structure damage. they need paint, carpet, or because the owners have lost interest via divorce, payment or for whatever reason. example i have presently bought a divorce case home for $126k i will do all the painting will have the carpet replaced it will cost me $10k at the most it will bring between $225/$250k thats my little trick. good luck....kenmax
Hey kenmax,
LOL.
Your "little trick" is bringing you "modest $100K" or about that much. How many such deals can you find and do yearly?
I guess you don't need guru to hold your hand
I was told by an appraiser that to be counted as additional square footage a finished basement must meet 2 conditions:
1) It must be heated living space
2) You must be able to exit the basement at ground level, i.e., no steps or Bilco doors leading up and out.
Moreover, you want every dollar spent to increase the resale value by at least $2-3 dollars, or so the rule of thumb goes.
I always focus on kitchens and baths, adding a deck is also a great feature that is guaranteed to raise the value.
In order for the house to appraise higher it must be USABLE and FUNCTIONAL.
A house that is not functional would be one where there is a bedroom located on a floor with no bathroom. Thus forcing you to ascend or decend to the next level just to access a basic facility.
Something that would lower the value and render a home somewhat un-usuable would be a massive winding stairway leading to the front door. That would dissuade many buyers, especially seniors and handicapped persons, but it could also create a hazard for children.
I always like to install phone jacks in every room, as you often receive phone calls while in the bathroom, basement and garage (functional). Another nice feature is to move the laundry room to a small enclave in the master bedroom, because it makes sense to have the ability to wash your clothes where you put them on and take them off, as opposed to packing up everything in a basket and hiking down several flights of stairs---only to return to the same bedroom to put them away. Again, the house becomes more functional by keeping the laundry facility in proximity to the location where its needed. I hope this helps.
Interesting ideas! I hadn't heard that about another exit on the basement level. I'll keep that in mind. You can create another door easy enough if any of the basement is high enough to walk out of.
i seem to have a little tallent for finding the deals i can find more than i can do. kenmax
Hey Kenmax,
Thats great! Especially if they are all just cosmetic fix ups and you can get a profit like you were talking about earlier. Those are the prefered rehabs in my opinion.
Madhouse,
It is a VERY rare deal where you can do minor "rehab" work and get a 1000% return on your costs. Be careful with what you hear.
Talking with an appraiser may help you decide what areas to concentrate on, but don't get too particular. Every appraiser is different and may assign different values for different things. Example, we considered removing an unused fireplace and installing a built-in entertainment system. One appraiser said he would add $1500 to the value for that, another would deduct $1000 for not having a fireplace (without adding anything for the entertainment system)
Many fall for the "finished basement" idea of increasing value. Usually, however, you end up losing money because you overspend on the finishing. Your area may be different, but in most areas where basements are common, they usually have a pretty fixed value. Example, around here, basements (and all unheated living space) are usually given about a $15 per sq foot value. If the basement is finished, it only adds another $5-10 per sq foot to the value. Compare that to $80-100 per sq foot for the first floor.
Such to add, 2nd stories and finished attics have lower values than the 1st floor, too. Here, for example again, 2nd floor values tend to be about $50-75 per sq foot. This is why you can't compare a 2-story home to a ranch style even if they are the same heated sq feet. It simply costs more to build the ranch.
Roger
Hi RAJ,
I agree, it's unrealistic for anyone to think that they can buy a house for X $'s and then double their money by doing some painting and putting in carpet.
As to a divorce couple letting a 250k house go for 126k........yeah, right....they may hate each other but they would be more likely to hate each other with each having 125k between them......instead of 62k.
I've been in the construction business for along time and I heard all sorts of stories about getting these super deals.......yes there are some good deals however the ones that are just pure cosmetic are very hard to find and rarely bring in a 100% return.
I see so many gurus making you think that everybody is getting rich cuz these deals are a dime a dozen.........hello people, many of the guru's are getting rich because they are peddling their stories, books and other stuff to the naive investor.
Many appraisers will tell you that houses are routinely over appraised.....it eventually catches up with some poor soul that gets stuck with one of those "great deal" and is left holding the bag.
I just finished a rehab that I bought for 60k (documented at cabarrus county court house) this was an estate sell ( no decendants)in which the executor (a friend) sold it to me without going through an auction......however hear is the rest of the story....I have over 40k or more tied up into it,
windows 5k
new kitchen 5k
new bathrooms 5k
move walls etc. 3k
new electric 4k+
new tile flooring, 2k
refinish hardwood, 3k
hvac, 3-4k
outside work, 3k+
and the list goes one........
as you can see, this is not cosmetic.
It is on the market for 139k.......plus I was able to subdivide the lot behind it........is this a common deal,....NO WAY!
If such deals were common then my bread and butter would not be new construction and home inspections.
If it went to auction then rest assure it would have gone for more.
I agree Raj, for newbies to think that such deals common is deceiving at best.
NC_Yank
Hey Kenmax,
If you're finding more than you can do, I'm about 40 miles from you. Just holler!!
I want to know why, when I raised the question on this board about lowering the appraisal value for a short sale, I was told that it was immoral and ultimately my post was deleted. How is raising the value for an appraisal any worse than wanting to lower the value for an appraisal????
Just ranting.
Brenda
Kenmax,
Adding a garage can be a very costly improvement, but, if other houses in the area have a garage, and yours doesn't, this may be a necessary feature. If you are the handy type and can build the garage yourself, this can improve the value of the house dollar for dollar while adding more desirablility when you try to sell. I think this would only be cost effective if you build the garage yourself.
I am in no way expecting to find alot of these deals. I was just commenting it was great if kenmax was. I will say though the one and only house I bought so far which happens to be the house I live in was a hud foreclosure. We bid on it and got it with about 40k in equity (probally could have got another 20k in market) and it would have cost about 15k to fix up. So although this might not have brought me 100% profit it would have brought me enough to tickle my funny bone. So I know there are deals like this.We fell into this one by mistake so if I'm actively looking I'm sure I'll be able to find a few more.By the way now, four years later we can sell for about 110% profit and are contemplating doing that. :-D As far as being immorale we are talking of ways to legally raise the value by doing work to the house.What is wrong with that?
I'll just be blunt here, because some people don't seem to be getting what Yank and I are trying to get across.
Buying a house at 50% of FMV that only requires PP&C (paint, patch & carpet) is, frankly a RARE deal. Can it happen? Yes, but not often.
Kenmax is suggesting that he invested only $10K in a property that will bring a $100K profit potential. That is not 100% profit, but one thousand percent profit. Now, I can tell you, these deals aren't going to happen very often.
Just so the newbies are aware here, kenmax has posted a classic board hustle technique. He has a great deal, and in his next post (which should have been deleted), he just happens to have "more deals than he can handle."
Just so it's clear, I'm not saying that kenmax is board hustling. Kenmax, if you're doing these deals often, more power to you. However, now you and everyone else knows exactly how it looks to the moderators and the more experienced investors.
Brenda,
No one has said anything about artificially raising the value of an appraisal. If you're referring to Yank's comment about "over appraised" yes, it's true. Practically anytime that someone refinances or especially opens an equity line, that appraisal will be to the very high side of market value. Why? At that time the lender wants you to get as much money as possible.
The difference between that and you're idea of "adjusting" the value down is that the lender is fully aware of their appraisal requirements, whereas in yours they are not, thus the possibility of fraud.
Just to clarify this, I see nothing wrong with saying to an appraiser to either appraise high or low on FMV. The problem comes when a price requirement is given. In your situation, Brenda, it wouldn't really matter anyway, as the lender will likely send out their on appraiser/agent to generate their own BPO report of value.
Roger
You need to talk to an apraiser. Go ahead and talk with people in the county assessors office, but residential and MAI appraisers are the ones who have the opinion than matters.
Regarding the 1000% ROI. Using ROI can be very decieving because many of us aren't putting much, or anything down. If it costs us $3 in photocopies to do a deal that nets us $30,000, that's a 1,000,000% ROI. Do those deals exist? Abosolutly (Say Short sale on a 200K property using private money to finance and rehab). In my opinion ROI is useful to compare opportunity costs when investing long term or a significant amount of money. That's a whole different topic though. The original poster may have paid cash for the home and repairs which would have made it closer to a 60% ROI deal.
I think this business is much like the stock market. You hear about the 1 in 100 deals at the company parties (late night television infomercials, etc), but not of the failures, mistakes, and average deals. Don't get me wrong, you can make a killing in this business, but it's tougher to make $100K per house and do 5 or 6 a month. [ Edited by hibby76 on Date 03/20/2004 ]
Thanks for all your advice and comments. I'm admittedly a newbie and just trying to learn and I understand what your points are
i can find at least one a month. that is more than i can do. for those of you that don't believe it can be done aren't looking into the listings "deep" enough. i am sitting in a 2600sq.ft. with six arces. i got it for 129,000 i am in murfreesboro tn. you tell me whats it worth also within 4 miles of me a 2000sq. ft. 5 arce home about to foreclose sold for 99,000 it only needed cos. work or just a real good "clean-up" you just have to look. ggod luck. kenmax
white bluff........ stay in touch....... your real close to me..... maybe we can talk , and look to gether....i will show you the three i found in the last 3 mos. you have to know the market value on site that takes a lot of looking to learn. the first was in murfreesboro tn. waychance rd. it was 1200sq.ft. and 5 acres needed carpet,paint, some plumbing work. they were asking 25,000 it sold for 22,000 to another rehaber. i know he will be asking around 99,000. you can check it out for yourself. the trick is doing all the work that you can . ggod luck kenmax
Hey Kenmax,
Let's do it. Even with gas prices as they are, I'm ready to ride.
713 e-me at quickez@netzero.com
years ago I read an article about what home improvements add the most value to a home. I believe it was the result of an annual study by the National Association of Realtors., You might want to call them up ask if they are still doing it.
Sorta a word of support for Kenmax. Calculating a 1000% return on his $10,000 invesment is probably not fair or accurate since a big chunk of what he's putting into the deal is his time/effort. ROI is pretty misleading under those circumstances since it tends to get compared to return in a passive investment and then looks incredibly good. In addition to his $10,000 I'm sure Kenmax has some big hours of his time either doing the work or supervising it. If you add a reasonable value for that time then the ROI would look much more reasonable as well. All in all I agree with the comment that this is not as easy as it sounds. and that the ROI is misleading.
CK you are exactly right! someone said "a little painting". i don't call painting a 2600sq.ft. house alittle painting. i have stripped wall paper and then resurfaced the walls. removed all the storm windows and painted the windows on a 2 story, replaced sub-floor in a bathroom and hallway, painted{stained| large deck, will have carpet replaced carpet, and replaced a hvac unit. i do all the work thats the key. i can do all the work for under 10k. i help fellow r/e investors when ever possible. thanks C/K i hope the "cubs" make it this year i'm a fan.......kenmax
[ Edited by kenmax on Date 04/07/2004 ]
[ Edited by kenmax on Date 04/07/2004 ]
[ Edited by kenmax on Date 04/07/2004 ][ Edited by kenmax on Date 04/07/2004 ]