Comstock's magazine 0118 - January 2018 | Seite 29

for a $300,000 profit. That makes for kill-
er entertainment, but it would be a mir-
acle in real life. In reality, profit margins
are much thinner and access to cheap
property is not what it was in the after-
math of the foreclosure crisis.
If we’re not careful we start to expect
that each time we spend a dollar on our
homes, we’ll get at least a dollar back in
the resale market: “I spent $75,000 on
concrete and backyard landscaping, so
my home is worth $75,000 more.” Or,
even more common, owners say, “I paid
$35,000 for energy upgrades, so buyers
are going to pay that.” But we have to re-
member value in real estate boils down
to what the market is willing to pay —
and that might be far different than the
cost. It’s not an easy pill to swallow, but
it’s the truth.
Okay, that was kind of philosophical,
so let’s get into the practical side. Here
are some things to keep in mind if you’re
upgrading your home:
1
Be careful when embracing per-
sonal taste: You love black shag car-
pet and zebra wallpaper — and your
style is important when it comes to
your home. I get it. But if you plan to
sell down the road, you might con-
sider marketability. Are buyers going
to jive with your “upgrades,” or will
your personal taste make your home
less marketable? Be unique in life; in
real estate, appeal to the masses.
2
Don’t outdo the Joneses: If you want
to command the highest price in
your neighborhood, then pay at-
tention to what is selling at the top.
Walk through the open houses, look
at interior photos online, and talk to
the real estate community. But don’t
do anything more than what the top
sales have done. In other words, keep
up with the Joneses in term of up-
grades, but don’t try to outdo them.
You don’t want to over-improve your
home to the point where buyers
won’t pay for the extra stuff.
3
Search the market: If you want the
skinny on what certain features are
truly worth, try to find homes with
and without those features. What
is the price difference? Conduct
some keen detective work to gauge
if there’s any price reaction for the
features. This is what appraisers es-
sentially do when pulling “comps”
(comparable sales). The idea is that
support for value is found in the
sales, so we look to the market for
similar properties to tell us what
buyers have been willing to pay. Re-
member, just because something was
expensive doesn’t mean it’s worth
anything to buyers.
5
Do absolutely nothing: Here’s the
irony. Someone could do everything
I mentioned above, but what makes
the most difference for value is the
market. For instance, we’ve seen
huge appreciation rates since 2012 in
the Sacramento region, and in many
neighborhoods a property owner
could literally have done nothing to a
house and yet be sitting on a proper-
ty that is easily worth 30–50 percent
more. Yes, a kitchen remodel might
increase value, but the big trend of
the market has so much more power.
If we’re not careful we start to expect
that each time we spend a dollar on our
homes, we’ll get at least a dollar back
in the resale market.
4
Focus on the small things: The big
stuff like adding square footage, a
new kitchen or a full interior remodel
definitely sways value, but buyers
also see the small stuff. This is good
news, because you don’t have to be
swimming in cash to add value to
your home. You might consider do-
ing things like painting the kitchen
cabinets, installing trendy light fix-
tures, painting a few rooms with on-
trend colors, getting a new mailbox
or planting flowers. It’s also a good
idea to tidy-up any deferred main-
tenance, which could include fixing
broken sprinklers, inoperable outlets
or a patchy yard. A few hundred dol-
lars here and there can really build
up a home’s image.
And on the other hand, when prices
were tanking in 2007, there was very
little an owner could have done to
outpace the rate of decline.
So what should you do to im-
prove the value of your home? Well, it
depends. n
Ryan Lundquist is a certified real estate
appraiser at Lundquist Appraisal Com-
pany. Read more at sacramentoapprais-
alblog.com. On Twitter @SacAppraiser.
Join Ryan every other month as
he tackles the big real estate
issues of our region.
January 2018 | comstocksmag.com
29