Whats the most important improvement to getting a high appraisal?

Question

I have a refi coming up and I have some money left in the slush fund after a basic rehab. What should I spend a little extra on to make sure I get a high appraisal? Kitchen? decks? flooring? Bathrooms? additions?

Mitch Borgen · Answer

Lol @Mags S., Whats's the most important update to add value to an appraisal?

@Justin Fox new flooring new, new carpets, paint, some new drywall, cleaned the bathrooms up, added a porch door/walkout in the master.. It also needed a new roof.

Mags S. · Answer

Increase the number of bedrooms and baths can bring a higher appraisal.

Justin Fox · Answer

Just ask yourself, "what would a woman like?"  That's who is going to make the decision to buy the property and hopefully appraise it too.  I've always, always gotten better appraisals for my homes when it's a woman doing it.

What did your basic rehab entail?

Jaysen Medhurst · Answer

Hey @Mitch Borgen, you're probably not going to see a return on that money. If the house is already on par with comps in the area, you can't really do very much. Typically, renovations only return 60-80% of their cost to a home's value.

Why not take the money you have for the reno and put it towards an investment property?

Aaron Mazzrillo · Answer

Buy the house down the street with one entity, do some fix up on it, then sell it to another entity you control for "top dollar." Now you have a new comp and have become the market maker in that area.

Mitch Borgen · Answer

@Valerie Hiscoe Thanks for the reply! I like the BRRR strategy and it really fits here. It's good to clarify the emotional difference between an appraiser and a lady looking for a home for her and her family!

Mitch Borgen · Answer

@Joe Splitrock Thanks for the response, its super helpful. It's a duplex. I will most likely live in one of the units. I plan to hold it for quite a while but the interesting part about this is it is an old victorian near downtown St Paul that was converted to a duplex. If I ever do decide to sell, It  would most likely make sense to convert back into a big victorian single fam home.  My plan is to sort of start that transition by making my unit nicer and then start on the upper unit once I am done renting it out.

Joe Splitrock · Answer

@Mitch Borgen adding square footage is number one. The overall condition plays into the appraisal. Updated kitchens and baths in particular seem to make the whole property look better. Light fixtures are easy and can make a house look 20 years newer. If you do flooring look at tile and wood, which are considered premium upgrades. I have also seen appraisers add or subtract for a fenced yard which I find renters like. I should ask, are you keeping this as a rental? That may guide your decision more than anything. I would be more concerned with what a tenant needs than the appraiser. Also you may be better off to pocket the money rather than to put more in. Let's say you have $5000 to spend and you will increase the value $5000. Why bother unless it improves your rental value?

Valerie Hiscoe · Answer

From what I have seen, appraisals run on comps in the area according to three things: square footage, beds/baths, and whether the property is in 'not-good, standard, or good' condition.  If the improvements you have made would make your property qualify as "good" condition, then your only other options are looking at the other two.

'Good' is tough to define but it means that, right from the street, your property looks well-maintained and skillfully updated.  It doesn't mean that it looks modern or trendy. If the exterior looks good, the walls, flooring, countertops, electrical and plumbing look, as yours most likely do, recently replaced or repaired, then you have done what you can to ensure your maximum return. If you were putting your sale, that would be different because then, as @Justin Fox alluded to, your buyers will respond to your property on an emotional level and, yes, the woman, will care a lot about the bells and whistles in the kitchen and bath.

Two things jumped out at me though: flooring - you mentioned carpeting. If your flooring is a little here and a little there, it might detract. Two: although it sounds like you've acknowledged the importance of curb appeal, just make sure your front entry is appealing and paint is fresh.

Sounds like you're well on your way to another BRRRR (with a strong focus on the "Repeat" with that slush fund you have).  Good luck!

Justin Fox · Answer

@Mags S.

Yeah, I meant a woman doing the appraisal, not the buyer.

@Mitch Borgen

You could replace the kitchen cabinet doors with nicer ones.  Update the counter tops.  Use updated hardware.  Really you just need to look at similar sized homes with the same bed/bath and see what finishes and floor plans the ones in the top end have.  You can add sqft but it can be expensive to have it done right and not look like a Lemony Snicket home.

Whats the most important improvement to getting a high appraisal?

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