Relationship between apartment condition and price

Appraisers consider condition but not in detail, which surprises people. However buyers DO consider condition, often without even being aware of it. Every real estate agent knows it's a problem when the tub grout is stained, even though that's a easy fix, because many people see that and conclude the bath needs gut renovation. Many people just can't see past things that are not major structural issues.

You've made your place much easier to sell in any market, and will fetch the highest price in your category. You have not made any capital improvements, such as upgrading the windows, adding a fireplace, adding a washer-dryer to the unit, creating another bedroom, adding a bath, etc.

This was overdue maintenance. Therefore from a net worth perspective you've raised the value by maybe 10 grand? Not 40 grand, in my opinion.

How on earth someone on a blog can make an evaluation on the place of an apartment without seeing it is pretty baffling. Appraisers in NYC often come in at the price on the contract. It's a little game they all play to get along with the banks. At the end of the day, the question is if buyers will respond and the fact is, buyers respond HUGELY better when a place is recently renovated.

I appreciate the comments. Flutistic, my hunch is that your comments are accurate, that I probably spent more than I raised the value. Like I said, I'm OK with that. Just wish I had been better able to evaluate the amount of work the place needed before the purchase went through. I considered myself a pretty savvy buyer, but didnt know that I needed skim coating to get the place to the level I wanted, and that skim coating and replacing moldings are very very expensive. The apartment showed well for the 15 minutes that I was in it. And then, it was mine. 3 months later, including 2 months in a rented apartment with my belongings in storage, it has a happy ending. Just that my wallet is a bit lighter. First world problems.

Guy I hear you, but I'm an old lady and I have tons of experience with this stuff, starting really in my teens, including renovating a large historic property, renovating rentals in multifamily properties I own, repairing property after a major fire, flood repair, additions, subtractions, etc etc. etc. etc. At this moment, no joke, I've got 2 properties in contract, about to sign this week for another, with 2 more on the market, and some others just holding---I just do a lot more real estate than most normal humans.

It's great what rc did but it's not going to raise the value of the property $40,000 on a typical one bedroom UWS. None of it is capital improvement. It's a lot of deferred maintenance, mostly cosmetic, getting caught up on. In QuickBooks or Quicken I would give myself $10,000 increased value on the property because of this work, that's all. If it turns out to be more, great.

Skim coating is always shockingly expensive, rc. But if you ever sit there and watch them do it, as i have, and maybe you did, you can understand why. Done right it is slow tedious work. And a poor skim coat job is just depressing--I had that happen once.

I don't think Elfa closets will ever be considered a resale investment ;-)

But you've purchased the apartment to live in and any work you've done is certainly going to bring up the value, even if only slightly. Keep in mind, though, that if you chose unusual or overly funky elements (say, and all-black-marble bathroom or lime-green tilework throughout the kitchen) you won't likely get much, if anything, back on that regardless of how expensive it may have been. Same issue if you've completely obliterated the prewar feel of the unit by over-modernizing the entire look. Lots of prewar enthusiasts won't go near an apartment that's been gutted to the point of losing any original character.

Also keep in mind that wear and tear during your time living in the apartment will take its toll (those Elfas won't look so pristine in five years, I guarantee you). Unless you are planning to sell in the very near future you may find the updates won't hold much water in resale value.

^^ First sentence of second paragraph should read "bring up the CURRENT value"

In NY unless you have a high end property every dollar you put in renovations your lucky if you get 25 to 50 cents back. In my opinion this is because renovations costs in NY are generally 3 to 4 times higher in the city then outside the city. For example the cheapest kitchen Home Depot told me generally runs 20K in the city in and generally a bathroom costs $12K. In NJ this same kitchen would be $6K and bathroom would be 5K. This is why you don't get your money back, people in the city are willing to spend but not overpay and to get something done in the city by a professional its just too expensive. Most of this I think you can blame on all the rules the co-ops and condos have like you can't work past 5PM, you prove insurance and everyone has different specifications, you must get the work done within the exact time period your told them otherwise your fined, etc. These rules may sound nice but they do get excessive. Building management companies and boards, should remember all of this raises the cost of making the building nice so do you want high costs or a nice building because people can afford to fix the building up. Its just like government, the more regulations, the higher the costs for the product or services and for renovations people are generally not willing to pay these high costs the value just does not add up.

I would think/hope though that this value increase analysis does not hold where it's a gut of an estate condition unit. We're doing a gut of a three bed prewar coop now. We're not doing anything crazy, but every inch has to be gutted, electric redone, etc. We definitely went for restoring the prewar charm (and had an architect that specializes in restoration). I would like to think we see more than 25-50 cents on the dollar. The purchase price reflected the condition. I think other buyers were scared by the undertaking which I don't blame them for at this point. I don't think I would do it again but really hope it was worth it, both from a living and resale perspective. We have kids too so it's been emotionally draining (not to mention financially).

RC: I would agree with Flute, as the increased value would be very minimal. Stuff like redoing cable wiring and getting elfa closets is personal to you, others might not even notice or care. Nicer floors, upgraded hardware might make one buyer lean toward your place over another, but sounds mostly cosmetic.

Best to just enjoy what you did for its own sake and not think of it as an investment.

Certainly the longer you live there, the lower the value of these projects. If you are doing these items for your own personal use & enjoyment, just relax & enjoy your lovely new home. Unless you're doing the work for a quick resale, this is all just jibber jabber.

Again, thanks for all of the time spent on the comments. Certainly not reselling, just wanted the information to understand how what I did fits into the larger picture. This apartment was actually in about the best condition of all the ones I viewed. And yet, it had all of these issues. I guess this explains why people tend NOT to do these renovations in the first place: they don't pay for themselves in the way that Viking stoves and SubZero refrigerators do. You have to really see it as your long term home to undertake these kinds of projects. Well, that's me. Happy holidays to all!

Thanx, rc. Happy holidays to you ~ I hope you'll be very happy in your beautiful new abods.

this type of renovation is consumption, not investment.

by the time you sell, the 40k you spent will add no value. you will be selling an apt that is worn and neeeds uypdating. and sub-zero and vikings will be old/passe as well.

unless you are fastidiously clean and neat, and sell within a few short years, renovation is genrally consumption.

that's one of the reasons it's better to rent, and invest in financial assets. like apple! (not GTAT, so far).

but then if you sell in a few short years, you get to bite hard on uamortized transaction costs. then there could be dental bills.

I agree with everyone here, especially yikes. That's why most new development in Manhattan always looks like crap, appliances are basic white if they are even installed, nobody bothers with a punch list regarding things like cabinets or faucet leaks, windows are always dirty from the construction debris that isn't removed, common areas are drab, etc. People don't want nice things, certainly not Manhattanites. They want the cheapest they can get, and then to continue to live that way. You are the exception of course, so just think about how many shares of Apple you could have bought with $40K. I'm not even sure why Apple is valued so highly, who needs a nice smartphone or tablet computer, why bother? Can just use a pencil and some recycled paper, nobody would ever spend hundreds on an iPad.

hfscomm1

Nobody even buys new developments. Why bother? Overpriced. NYC hasn't sold a new development in years. Certainly not in better neighborhoods. The people who live in Chelsea, Tribeca and the Upper East Side don't want things like that when they can' invest their money in Apple and Herbalife.

hfscomm1.

http://streeteasy.com/nyc/talk/search?search=hfscomm1&commit=Search

Fieldschester, not sure what you mean. I've looked at many of the websites for new development and they almost always go on and on about Waterworks this and exotic stone that and amenities all over the place. Really over the top stuff, priced accordingly. How does that square with what you're saying? Nobody buys these apartments? How can that be true?

sarcasm

Anyhow, Fieldschester, that raises a good point. You have all of these buildings being marketed with high end finishes, priced at 1500 and up psf. Why can they regularly get people to pay over a million dollars for a 1 bedroom, but a renovation like mine doesn't pay for itself? What's the difference? Condo vs coop may be an important one.

Condo v co-op is huge, especially right now, when the market has so many buyers who would not be able to get into a co-op. For example, LLCs are rarely allowed to buy in a co-op. And then there are those who can get into a co-op but would really, really, really prefer a condo, like us. It would take a lot to convince us to buy in a co-op.

Also, you haven't mentioned much about how you apartment compares with others in the building. Was your unit the equivalent of the dog on the block?

In the suburbs, if your house is in a nabe of 3 bedroom houses, and you have the only 4 bedroom house, even though that's hardly only a cosmetic difference, the price of your 4 bedroom is going to be suppressed because of the neighborhood. Because the 4 bedroom buyer wants to live in a more expensive nabe and that means more square footage in the neighbors' houses.

By contrast, if you have the only 3 bed in a nabe full of 4 beds and up, you will do well selling that house, because the buyer will feel they are getting a bargain relative to the nabe.

It's a lovely Rosario Candela building of mostly one and two bedroom apartments in the west low 90s. No studios and nothing over 1500 sf. Very gracious layouts. Before anyone dismisses the 90s and says that 1500 psf is not the norm for the neighborhood, I will preemptively say there are lots of new developments all around us that are commanding 1500 psf. Not the older buildings, unless they've reinvented themselves as new developments. I paid 800 psf and got a 15 yr mortgage at 2.875 and feel that I got good value even after the renovation which was 50 psf. What do these new developments in prewar buildings have that a newly renovated apartment in a prewar building doesn't have?

----What do these new developments in prewar buildings have that a newly renovated apartment in a prewar building doesn't have?----

You are comparing apples and oranges - resale vs brand new. Buying a shiny new dev, straight from developer, means the reno is completely fresh. Buying a resale unit that was renovated several years in the past is a whole different animal (or fruit, as the case may be).

DO HOME IMPROVEMENTS ADD VALUE?

rc10000, renovations are great for any apartment. However, not all renovations are created equal. There are some improvements that have high resale value and those improvements that can have a negative impact on the resale value.

Basic improvements and upgrades that your home value can immediate benefit from are fixing any uneven paint, bad wall repair job, an empty dining area or general messiness that could be scaring buyers away. Focus on the four main areas to upgrade: Kitchen, Bathroom, Outdoor Spaces and Roofs and Windows. The kitchen and bathroom areas are the first places a seller should update in an older home. Buyers are looking for the modern conveniences they can find in newer homes and can result in a good return on your investment. Keep in mind that when you are renovating, the highest cost product doesn’t bring the same high return on your investment, unless you are selling a VERY high-end luxury home. Stay away from the cheapest upgrades too. Typically, mid range ones, can get the best return!

If you have any other questions, please contact me today.

Jessica
Citi Habitats 212 434 5206

I like it Jessica. A call to action within an expiration for the offer.

You shouldn’t even doubt that you’ve made a good thing! You made all this improvement for yourself and your comfort! That’s great! From your description the improvements were considerable, but you’d better add some pictures to see and to be more objective about the matter. Moreover, if you’ll decide some day to move and sell it, you’ll get more money as people like to see modern conveniences and styles. Modernizing older styles or appliances usually results in good return. Renovating, remodeling, and improving your home can be great ways to give it a makeover, gain extra space and make it welcoming and warm. If you doubt look at the prices of the house without any improvements and with some that have been done, for example, at Localmart to make sure you did the right thing.