Busting the Comps

[Joseph Zerfoss]

My question has to do with how much more you can realistically get for a house with "wow" factor.

Say you buy a super-trashed house and plan to do a complete rehab. New siding, windows, paint, carpet, kitchens, baths, doors, trim, etc. The surrounding area is well-kept, low crime, good schools, etc.

Now, let's say that the average house of comparable size in that neighborhood, in decent condition but nothing special, is going for around $125k. If you make your house really stand out, i.e. custom cabinets, granite, all tile in the bathrooms, nice doors and trim, you get the picture, something that is a real cut above the other houses in the neighborhood; how much more can you realistically get for it? I guess the real question is; how much more can you get it to appraise for? If you want it to sell quickly you need your buyer to get their financing.

I am new to the game, although I have been doing rehabs for years...just not on my own properties. Any input from my more experienced friends out there in BP land would be awesome!

[Steve L.]

Joseph -

Appraisals are allowed to do about a 10% adjustment on condition. So if a property in poor condition sold for 125,000, if they cannot find other fixed up comps they are supposed to add 10%.

In this market, most of the properties that you can buy at wholesale prices will be trashed and not qualify for cheap financing. So you will be making all the repairs anyways.

DO NOT OVER FIX A HOUSE. Thinking you are going to get very much "extra" for a high-end remodel compared to a typical fixed product would be a huge mistake that the Buyer will be the only beneficiary of. It will move faster.

I'd suggest you walk properties in your market. Finished product and non-finished product and see what works and what doesn't.