Question about house remodel and appraised value.

[HHSTigerFan]

Here is the deal, our house was built in 1960 and still has the original siding, windows and kitchen cabinets.. House was recently (2009) appraised at $140K, we owe $120K on it.. Have gotten back a few estimates to replace all the windows, doors, siding and gutters on the exterior and then redo the kitchen plus 800 SQF of flooring(wood laminate).. Estimates we are getting back are around $50K.. Is it possible that this work will increase the appraised value by the $40K we need it to to get it done? Can new siding and windows add a lot of value to a house?

It seems like the exterior work is around $30K and the kitchen/flooring is $20K..

 

[Bren's Mom]

That depends on a lot of factors.

Is your home one of the better/larger ones in your neighborhood? (Or will it be once you finish that?) What are things selling for, how good is the market in your area? Are you planning to stay there or to sell?

What kind of appraisal was done in 2009? Was it a tax thing or a true appraisal requested by a bank for a refi or something?

Is the current siding looking really in need of repair? If it's not, that's probably not something I'd do if I were selling. I'd repair gutters, landscape nicely, put in pretty bushes and flowers, etc...but not do a big expensive siding job.

The kitchen on the other hand I might. Depends on the neighborhood.

 

[herdtoDisney]

There are so many varieables to consider. What are the values of other homes on your street? Have many of them done the windows/siding? If the other houses are similar and are going for 200k, then it's probably worth it, but if they're lower, you might be overimproving.

In my area, replacing windows does get back a lot of value. Siding and gutters does too-although if the existing siding is in good shape, a professional paint job makes value too. 30k seems like a lot, especially for a house worth 140k-is this a large house with lots of windows?

As far as the kitchen-remodels usually bring value, but 20k seems like a lot for a 140k house-but I live where 140 won't get you more than a 1br condo, so it depends on what homes go for where you live.

Myself, if I was considering doing this much work, I'd research the values of the homes around me, and then decide if I wanted to do all that. I would likely do the windows though, because of energy efficiency (but I live in the Northeast, it's a big deal here).

 

[HHSTigerFan]

We are planning to stay for the time being, could be 5 years or it could be 20, who knows. I would say our house is the largest on the block, 1780 SQF while the others are 1400ish.. If fixed up, our house would be the nicest of the 4 in our block..

I really can't think of a word to describe the siding other than nasty and embarrassing, not only is it pealing in spots, also starting to rot at the bottom.. Same with the windows, single pain that leak..

Problem with the windows is that while we only have 14 that need to be replaced, 3 are 6'x6', two are sqatty windows that were about $1K a piece..and then a 127" picture window.. prices for Andersen, Pella etc were in the $16K area plus labor..

 

[HHSTigerFan]

As far as the kitchen-remodels usually bring value, but 20k seems like a lot for a 140k house-but I live where 140 won't get you more than a 1br condo, so it depends on what homes go for where you live.

The $20K for interior included new cabinets, removing a closet and then flooring in not only the kitchen, but hall and family room as well.. And thats stop price, bids were about $10K for cabinets and counter top, $4K for installed flooring, so leaves a lot of wiggle room..

 

[JennCa]

Just want to tell you our story. Every area ia different. I live in No Cal where prices were unusually crazy. Anyway, I have a 2400 square foot house that is valued at 400K right now. I have been talking to realtors about putting it up for sale and although my model house has been selling for between 390K-410K but I don't have a pool he said that even though we spent 50K on the house to remodel everything inside: I have all the highest end Kitchenaid appliances/convection oven, all new lighting, beautiful landcaping, all new paint inside and out, all new flooring, new faucets, new toilets, new baseboards, a new shed, a new gazebo outside, etc. The realtor says that that our house on the inside will blew anything else out of the water in a similar range and it will sell quickly at a similar price to the others since I've been to their open houses and know what they look like and it's not good, but you have to work on square footage. I asked him what would have happened if I added on square footage and he said I might get a bit more, but really it needs to be the middle of the road for your neighborhood price regardless of all the other conditions. If the market were different, this might be different also. Bottom line, when you remodel they say you will get your money back, but that is not the case in our experience.

If you are remodeling for your own benefit and not expecting it to add much value when you sell then that is sometimes worth it. If you have to pay to move, realtor fees, etc then that would cost you money.

It makes me so mad that people tell you it increases your houses value when in our case it didn't.

Jenn

 

[Green Tea]

I would say that "maintenance" type of things like siding and replacing damaged windows won't increase the value at all.....they have to be done.

I'm in the process of doing the same things as you are mentioning for exterior work because it is just time. I'm not considering return of investment, value added; it is just required/expected maintenance.

 

[HHSTigerFan]

I would say that "maintenance" type of things like siding and replacing damaged windows won't increase the value at all.....they have to be done.

I'm in the process of doing the same things as you are mentioning for exterior work because it is just time. I'm not considering return of investment, value added; it is just required/expected maintenance.

But to get the financing, we have to have it appraise at X amount of dollars..

 

[tlbwriter]

Estimates we are getting back are around $50K.. Is it possible that this work will increase the appraised value by the $40K we need it to to get it done?

It's possible but not very likely. You're looking for an 80% return on your investment. According to Forbes, most projects bring less than that. And according to this website, ROI in the 80% range is possible for your siding and windows (it varies by region), but you also have to consider the fact that you are already the largest house on the block so your value can only go up so much.

 

[HHSTigerFan]

It's possible but not very likely. You're looking for an 80% return on your investment. According to Forbes, most projects bring less than that. And according to this website, ROI in the 80% range is possible for your siding and windows (it varies by region), but you also have to consider the fact that you are already the largest house on the block so your value can only go up so much.

The two houses on rach side of us are about 1400 SQF, difference is that we have an addition that was built in 1980.. Both of those houses have recently appraised for $152K and $165K and with the improvements our house would be more current.. I guess what we need to shoot for is to be appraised at $180Kish so the financing can go thru..

 

[bmraar]

We just did some similar projects: new roof/gutters, all new flooring, new front door, granite countertops. I highly doubt your appraisal will change much at all. Our appraisals (we had 2) were both based almost completely around recent sales in our area, and had little to do with the house itself.

 

[Darcy03231]

We just did almost $40k of work to our house - siding, windows, roof and deck. Everything really needed to be done. We haven't had a formal appraisal yet, but based on sales in our area I would say we've increased the value by about $30k.

In our area appraisals take into consideration the home's condition, age of the roof, etc.

 

[HHSTigerFan]

We just did some similar projects: new roof/gutters, all new flooring, new front door, granite countertops. I highly doubt your appraisal will change much at all. Our appraisals (we had 2) were both based almost completely around recent sales in our area, and had little to do with the house itself.

Not what I want to here!!!!

Haven't been real good comparisons in this small town, house thats 1340SQF and was recently remodeled, is on the market for $162K.

 

[blanq]

But to get the financing, we have to have it appraise at X amount of dollars..

I don't want to burst your bubble, but I think you really need to think about whether financing will be realistic for your situation. You have not specified if you will refinance your existing mortgage or take out a HELOC, or fixed loan on top of your existing mortgage, but your LTV right now is almost 86%. Many banks will not want to finance you unless you have at least 20% equity in your home.

Also, I would concur with those who have stated that in most instances things like windows, roofs, etc do not add value to your home as everyone at minimum expects them. However, a roof, windows, siding in poor condition will detract from the value of your home. Around here some siding, in particular Hardie, can add value because it has a great life once installed.

Two years and a half years ago we did a major home renovation, costing $120K. It was right at the time home values started to drop. It was all interior work...kitchen and bath gut and other work. We used high end materials. We had it appraised before and after the renovation, and it appraised at exactly the same after the renovation. For us this is not a huge issue as we still have a significant amount of equity in our home and we plan to stay for another 20 years.

 

[herdtoDisney]

We are planning to stay for the time being, could be 5 years or it could be 20, who knows. I would say our house is the largest on the block, 1780 SQF while the others are 1400ish.. If fixed up, our house would be the nicest of the 4 in our block..

I really can't think of a word to describe the siding other than nasty and embarrassing, not only is it pealing in spots, also starting to rot at the bottom.. Same with the windows, single pain that leak..

Problem with the windows is that while we only have 14 that need to be replaced, 3 are 6'x6', two are sqatty windows that were about $1K a piece..and then a 127" picture window.. prices for Andersen, Pella etc were in the $16K area plus labor..

Yeah, odd sized windows add up to a lot of $. We put windows in a house once and they were almost all odd. I didn't go with the name brand ones (Anderson, ect) but with a local place that made them-it was a lot cheaper. You might be able to get an estimate from someplace like that-$16000 just seems like so much for not that many windows. I would think it should be less.

If it was me, if I had this situation-honestly, I'd probably take a long view, meaning, I'd do the stuff little by little. I'd probably start with the windows and repair the siding and paint it. I would probably not replace or vinyl side it now. My dh replaced a bunch of the cruddy wood siding on our first place, and we painted it ourselves also. It really helps if you can do as much of the labor yourselves as possible. At least doing the things I mentioned would get the outside 'buttoned up' for the time being.

I'd probably put off the interior for a couple years-maybe in the interim, refresh the kitchen with paint. If you guys can do the labor for the floors yourself, you could do the laminate for about half the quote.

I know it's frustrating-we bought our place 1.5 years ago and we have a ton of things we want to do, kitchen, bathroom, roof...but it's like eating an elephant, one bite at a time LOL.

 

[HHSTigerFan]

I don't want to burst your bubble, but I think you really need to think about whether financing will be realistic for your situation. You have not specified if you will refinance your existing mortgage or take out a HELOC, or fixed loan on top of your existing mortgage, but your LTV right now is almost 86%. Many banks will not want to finance you unless you have at least 20% equity in your home.

Also, I would concur with those who have stated that in most instances things like windows, roofs, etc do not add value to your home as everyone at minimum expects them. However, a roof, windows, siding in poor condition will detract from the value of your home. Around here some siding, in particular Hardie, can add value because it has a great life once installed.

Two years and a half years ago we did a major home renovation, costing $120K. It was right at the time home values started to drop. It was all interior work...kitchen and bath gut and other work. We used high end materials. We had it appraised before and after the renovation, and it appraised at exactly the same after the renovation. For us this is not a huge issue as we still have a significant amount of equity in our home and we plan to stay for another 20 years.

We are going to use an FHA 203K loan, only need 97% LTV.. I am assuming the last appraisal deducted value because the siding and windows were in bad shape.. House next door to us is a quite a bit smaller, but appraised for more than ours in 2009, but they have new siding and windows

 

[GoofyGolferGirl]

I think it totally depends on where you live, the neighborhood I live in houses sell within 3-4 months, not at all what the national average is. 25 miles away in another town they can't give them away.?

 

[HHSTigerFan]

Yeah, odd sized windows add up to a lot of $. We put windows in a house once and they were almost all odd. I didn't go with the name brand ones (Anderson, ect) but with a local place that made them-it was a lot cheaper. You might be able to get an estimate from someplace like that-$16000 just seems like so much for not that many windows. I would think it should be less.

If it was me, if I had this situation-honestly, I'd probably take a long view, meaning, I'd do the stuff little by little. I'd probably start with the windows and repair the siding and paint it. I would probably not replace or vinyl side it now. My dh replaced a bunch of the cruddy wood siding on our first place, and we painted it ourselves also. It really helps if you can do as much of the labor yourselves as possible. At least doing the things I mentioned would get the outside 'buttoned up' for the time being.

I'd probably put off the interior for a couple years-maybe in the interim, refresh the kitchen with paint. If you guys can do the labor for the floors yourself, you could do the laminate for about half the quote.

I know it's frustrating-we bought our place 1.5 years ago and we have a ton of things we want to do, kitchen, bathroom, roof...but it's like eating an elephant, one bite at a time LOL.

If the numbers don't work, that will be what we do, spend the money on windows and siding and tackle the kitchen down the road..

 

[Bren's Mom]

If the numbers don't work, that will be what we do, spend the money on windows and siding and tackle the kitchen down the road..

That's what I was just coming back to suggest.

I'm confused, though. They're going to give you an appraisal based on what they think it would be worth IF you did all the work? I take it you're taking money out of equity to do this? If so, be very, very cautious not to do too much on the off chance that you move closer to the 5 year mark rather than the 20 year mark.

 

[HHSTigerFan]

That's what I was just coming back to suggest.

I'm confused, though. They're going to give you an appraisal based on what they think it would be worth IF you did all the work? I take it you're taking money out of equity to do this? If so, be very, very cautious not to do too much on the off chance that you move closer to the 5 year mark rather than the 20 year mark.

Its an FHA program that allows you to do certain projects based on what the house is worth after they are completed.. For a project of this size, you hire an FHA consultant to make sure the projects being done will not go beyond what the house will be worth.