RE: I am On TV!

Posted by Mysti in Texas at 8:51 PM, Jan. 22, 2008

I just watched your debut episode.

How is that a couple purchase a house, put in some very nice (although obviously not up to your specs) upgrades and wind up with a house that has depreciated.

I also find it interesting that in the last vignette on the show (in Seattle), the couple have a house that they have also done some nice upgrading on but have serious foundation problems and a school across the street (one con fixable, one not) yet they still managed to get $75,000 OVER what they were expecting.

Granted I am armchair quarterbacking here. While I do realize that we are speaking of two vastly different housing markets and we don't necessarily see all of the "issues" a house may have due to time constraints and editing. However, I am sincerely confused by your estimate of what the house you appraised was worth.

RE: I am On TV!

Posted by Julie Woodward-Trenker at 8:56 AM, Jan. 23, 2008

Hi Mysti:

Thank you for your recent comments.  And yes, they are two extremely different markets.  A common misbelief is that by doing upgrades, your home naturally appreciates more than the costs.  That could not be more from the truth. 

First, and of course this is not shown on TV, I felt this couple had orginially over-paid for their home in that area.  From the market stand point at when they purchased, they paid at the high-end (for a home that needed work no less).  I can tell you from experience that is not the first time that has happen.  People fall in love with the home and then go to work to make it their dream home without given consideration of the neighboring properties.  No home is an island.  Had this home been just two blocks west, tear-downs were going for significantly more.

Secondly, you have to take into consideration costs of renovations (labor, type of materials they used, etc.)  Don't assume buyers are going to pay you extra for your home because you put in expensive mosaic tiling versus ceramic tiles.  As long as its up to date and asthetically pleasing, that's what counts.  Example, buyers will on an average, opt for granite versus paying a higher premium for marble (unless the home resides in an area where this is expected).   Recouping costs are not 100% plus on everything.  Two homeowners can put in similiar cabinets at a significant cost difference yet they will reap about the same in profit. 

Lastly, is the common problem of doing too much, too soon.  There are several other investments these homeowners had made in the home that have already made it the biggest dog on the block.  Not to mention, the basement project was currently underway that has significant costs added.  If your market is only appreciating at say 5% per year (and right now in some areas, not at all), yet you are putting in 20% value plus, you are outpacing the market and need time for it to catch up.  I personally added an addition to my home at a cost of $50K plus.  Did my home increase in price $50,000?  No.  However, over time these improvements will increase a home's overall desirability and resale value.  Bottom line, it will pay off, just not tomorrow.  Hopefully I have given you clarity to this very complex subject. 

I personally loved the home I assessed and feel in time, this couple will reap the benefits of their efforts.  They have great taste and vision, but in this neighborhood, they are a few , if not several years ahead. 

RE: I am On TV!

Posted by Mysti in Texas at 7:51 PM, Jan. 24, 2008

Wow, thanks for that great answer! You certainly cleared a lot up for me and gave me food for thought.

Appreciate it!