We interviewed professional appraiser Bob Hanson, an Indiana Licensed Residential Appraiser, with several years of experience for this article. In it, we ask Bob some of the questions people have about the value of their home in relation to improvements and market factors.
Note: Due to the length of the interview, and in the best interest of providing you with as much of this valuable information as possible, we will be posting this Expert Advice interview in multiple parts.
AD| When is enough, enough? When does a homeowner know they have improved their home to the point where it will offer them no additional value?
BOB| It’s a personal issue for people. If you are not concerned with market values, improve the house all you want – make the house the way you want it.
AD| But let’s assume that someone is cognizant of market value and they don’t want to over-improve their home. but they want to keep up with the Jones’s.
BOB| I think the word that comes to mind is “conformity”. How does your house conform to the neighborhood and the vicinity? If you’re in a vinyl village and homes are starter type homes and therefore the finishes in the home are builder grade, then if you start adding in expensive items like hardwood floors and granite countertops it will be appreciated by the buying public; but, you will not get your money out of it. So, you need to be aware as a homeowner as to what is typical in the marketplace, what works. You don’t really want to go over that. If you do, just know that you are not going to get your money back.
AD| How does someone go about discovering what is “typical”?
BOB| Look at your own house. When has it been updated? We say, as appraisers, we look at a home and say it has a 30 year life cycle. What we mean is that every 30 years, your home will have all the maintenance systems replaced and clearly before that in some instances. Kitchens and bathrooms need to be updated and kept up to certain standards and if you lag behind, the market will react. The potential buyer is going to come in and they are not going to offer you as much for your home, because they are going to want to update it. So, the first thing I would say, is look at your home and is it in vogue with the times. When was the last time things have been updated and upgraded? If you are with vinyl flooring that has been in your kitchen for 20 years, then I’ll go out on a limb and say that it probably needs to be switched out.
AD| Is it good or is it bad to be the “best” home in the neighborhood?
BOB| It’s good in a sense, because you enjoy having a top of the line home. From the real estate sense, it’s bad because you’re going to be the guy that is going to pay the price. You’re going to set the bar where everyone is below you. So, if you go to sell your home, undoubtedly, you’re going to be hurt by your neighbors because they are going to be inferior to you. Appraisers, the real estate community, homebuyers are going to be looking for what homes have sold for in the neighborhood. If you are 10%, 20%, 30% above that average market value, you are going to be in trouble. You won’t get the money out of your home that you’d like to have gotten…unless, of course, you meet that one special buyer that comes along and loves the home as much as you and pays the price. That typically does not happen.
AD| If someone is considering adding, finishing or refinishing a space in their home, what space would you recommend getting the biggest bang for the buck?
BOB| I almost say that it is a unique situation almost every time it’s a case by case. There are some homes that desperately need another bedroom. There are homes that need the kitchen updated. Generally, with kitchens and bathrooms you get the biggest bang for your buck.
AD| But what about space like over the garage apartments, bonus rooms and adding spaces like basements to be finished?
BOB| It really depends. Going to the basement – is it a walk-out basement? Does it have day windows where if there were a fire you would be able to get out of there? How tall are the ceilings? If you have 7 feet, versus 9 feet, you have a completely different space and environment. Are you housing maintenance items down there, like the furnace? Do you have a sump pump in place? You have to look at a variety of factors going on there. As an appraiser, we look at other factors like any plumbing in place for a bathroom or is a bathroom already installed – the cost of that. The market typically reacts very well to having at least a half bath in the basement, because typically if you finish it, you are going to have a rec room or a place for the kids to play. So, having a bathroom down there means that you don’t have to run upstairs to find one. You need to look at ceilings, walls and flooring – you need to have some type of covering, something done to them to be considered finished. Obviously, you will need to have duct work in place for heating.
This is a good place to create a stopping point. Tune in next Friday for Expert Advice: Residential Appraiser | Part II. We’ll continue talking about adding/removing/repurposing spaces, clutter, design styles and several other factors that can affect the value of your property. Join us!
March 16, 2012 | Filed under Expert Advice, General Information and tagged with Aesthete Designs, Brownsburg Interior Design, Design, Indianapolis, Indianapolis Interior Design, Interior Decorating, Interior Decorator, Interior Design, Interior Designer.
Aesthete Designs is an interior design firm providing interior design and interior decoration services to residential and light commercial clients in the Indianapolis metro area, including the following communities:
Zionsville, Stonegate, Lebanon, Carmel, Westfield, Geist, Fishers, Brownsburg, Pittsboro, Avon, Danville, Plainfield, Greenwood, Eagle Creek and surrounding areas.
Aesthete Designs redid our living room, dining room, two bathrooms, a den, two bedrooms and our kitchen. They took up our outdated 80s carpet and refinished our hardwood floor, which are absolutely beautiful. They took out our dated kitchen peninsula and linoleum, which opened up our kitchen and dining room. They got us lighting fixtures, hardware and redid our cabinets. The list goes on and on. We absolutely love our house. We sit and talk in our living room for hours just enjoying it. They also helped us pick out accessories, designed a functional furniture layout and assisted in the purchase of new furniture. The icing on the cake? They came in about 20% under budget and were about two weeks ahead of schedule. I would definitely use them on my next project.
— Judy W., Brownsburg, IN