Renovations and May Closings

There are many components a prospective purchaser will consider in valuing real estate. Simplified, they include the land value and improvement value. The value of the land reflects location, size, access, neighborhood, zoning, rights (including untapped building potential or access to public utilities), topography, views and more. The value of the improvements includes the house, existing utilities and additional improvements taking into account upgrades and wear and tear.

Upgrades and wear and tear are difficult to quantify. Renovations made to current standards with general appeal add value. The trick is defining renovation and improvement value in a listing. Often only select items are renovated. Perhaps an owner will upgrade HVAC, plumbing and electrical systems so the house is cleaner, more efficient and cheaper to operate in addition to fully upgrading the kitchen. Another owner may leave dated systems but upgrade bathrooms throughout. Another might piecemeal renovations as items age beyond their useful life. All such renovations add value, even if they are reflective of entirely different scopes of work. So even though a renovation date is an imperfect measure of comparison, by taking a quick look at single family home sales year-to-date, homes that have been renovated recently are more likely to sell. The flip side may also be true, in that the less remaining wear and tear, the less likely a prospective purchaser will be to walk from an otherwise suitable home because of anticipated costs associated with the risk, time, and effort to renovate.

2017 06 11 chart
Data source: Greenwich Multiple Listing Service

Similarly, a house that suffers from dated floor plans that is not easily converted to a modern floor plan (also know as functional obsolescence) will likely linger on the market if priced to similarly sized homes with a more modern flow. Advising a seller that a floor plan that has worked for their family may be hindering the value of their house is tricky to the extent that there are few objective facts that one can gather to back up the observation. Still, a detailed look at homes that have lingered on the market often reveals homes with floor plans that are not easily opened up to allow light, air flow and distant visibility.

May 2017 Closings Report (Contact me in order to obtain access to reports).

June 11, 2017 Open House Report

Come see me Sunday at 85 Richmond Hill Road. 2:00 to 4:00

Mary Stuart
20 years professional real estate advice.
Mary Stuart G Freydberg, Sotheby's International Realty
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