Pricing on gut renovations

Worth the same.

worth the same as what... an identical functioning apartment? Really I'm not talking about an apt that is not 'aesthetically pleasing' -- I'm talking it's been in disrepair for decades, and hasn't been updated or upgraded since it was built, in the 1910's...

30% of asking price

Appraisals will use a term called "cost to cure" - how much money is it going to take to make the apt "functional" again.
Therefore, if a "regular" apt is worth 700,000 and the "cost to cure" is 10,000 the "ugly" apartment is valued at 690,000.

Cost of labor, cost of materials, cost of approvals and permits, cost of bribes and tips, cost of getting plans and permits approved, cost of not being able to use the space for the entire period of renovations, cost of your own time and supervision, cost of the headaches you'll suffer.

scargo -- are you saying bid 30% OFF the asking price of the unit, or only bid 30% of their total asking price?

shaimegiddo - is there any way to find out what guidelines appraisers use? This is the first time I've heard this phrase before.

who's the best to have come look at the apt before you bid - a contractor, or an architect?? or someone else entirely?

Is this book what appraisers use when estimating cost-to-cure? or something similar? http://www.bluebook.net/products/cost-2-cure/

Tandare - best to take a general contractor, or home inspector with you to take a look at the apt. (definately not an architect).

As far as appraisals - their guidelines are exactly what I listed - how much would it take to bring it back to a minimum livable condition. (They will not disclose specifics to the buyer prior to doing a report, because they don't want you to make changes to "fit" the guidelines).

Now - I'm not saying that this is what it should be worth TO YOU,i'm just saying this is how it's officially appraised. When making an offer, also consider the cost to you(material,labor) and the time that you will have to pay 2 housing payments - rent, and the mortgage on the apt while being fixed.

I am facing the same dilemna. There is an apartment in the same line that is in good condition 4 floors down for 999,000. This unit is listed for 899,000. It looks like 300,000 in renovations. Therefore, I was going to try to buy the apartment for 700,000. Allowing 10 per floor premium and a little room for the aggravation factor. Does this seem reasonable?

nycbuyer1 - get an estimate of the price from a general contractor or even 2 contractors to compare pricing.

Ask the realtor/sponsor agent what are the chances that a 899k apt will sell for 700k?? don't make an offer that will "burn" you early in the process....maybe they will go down on their own in 2-3 months? you never know....anyway don't forget to also estimate the cost of renting and paying the mortgage while construction is going on.
Good luck.

thanks shaimegiddo. i don't think that the sponsor wants to sell at the price i offered. they will not counter. oh well, there are other units on the market..

"worth the same as what... an identical functioning apartment? Really I'm not talking about an apt that is not 'aesthetically pleasing' -- I'm talking it's been in disrepair for decades, and hasn't been updated or upgraded since it was built, in the 1910's..."

If you have to put in a new kitchen and baths, what's the difference in price if they haven't been renovated in 100 years, 70 years, 50 years, 20 years, 10 years... or even yesterday but have fuchsia cabinets and lime green appliances with cherry red laminate counter tops. Once you have to rip it out and put in a new one, the cost is the same. And if you buy an apartment which "you can live with for a year" but know in a short time you will need to put in new kitchen and baths, how much value did you get? Apartments aren't houses: pretty much EVERY apartment renovation is "cosmetic" because almost no building (even Condos) will let you do anything "structural".

Cost to cure is a really terrible concept for people actually figuring out what to pay, because it WAYYYYY underestimates what any rational purchaser will ACTUALLY end up spending. But also, 'cost to cure" and "ugly" really shouldn't be used together. Cost to cure is for items like broken hot water heaters, leaky roofs, broken windows, not making stuff "pretty". In reality, if - in an apartment rather than a house - there is a "cost to cure" item, odds are that the apartment is worth the same: take an apartment with a 40 year old kitchen. In one case, none of the appliances work, the sink is leaking, the linoleum flooring is coming up. The "cost to cure" may be $10,000. But if you had an almost identical apartment, but the linoleum floor was still stuck down, the 40 year old appliances still functioned, the 40 year old faucet didn't leak....... does anyone really think the second apartment is worth more?