In this business, accurately determining the value of property is crucial for your success. In whatever location you decide to start your business, you need to familiarize yourself with the real estate particularities of that locale. I have made all my money by working in just one county. Why? I have made myself an expert on the county; I know exactly what I can sell a given property for; I know when I can push the value up an extra $10,000 and when I can’t. These are good reasons for you to find a location, then stick with it and really study it. YOU become the real estate expert of your area.
There are several ways you can learn the value of properties in your locale. A simple but effective method I used is the following: Drive around your area and every time you see a “For Sale” sign on a property, call the listed realtor. Act like an interested buyer who wants to get basic information on the property, such as how many family units it holds, the number of bedrooms and bathrooms, total rooms, square footage, and most importantly, the price. Then begin accumulating the information in a notebook.
As you continue to collect data, you will begin to see correlations and comparisons as to why one property sells for this price and another sells for that price. You will also want to ask the realtor if the home is new, near new, or has been recently renovated. Why? These give you a good idea of whether the home will need repairs or not, and repairs bear directly on the value of the property. If the house next door to a property you inquired about recently sold for $130,000, but was in need of repairs, you can figure that the house you’re looking at can sell up to 30% higher if it is in good repair! You just need to know if such repairs have already been done or not.
LEARNING FROM APPRAISERS
For the moment, let’s explore what appraisers look for when they determine the value of a property. Among the many factors considered and included in their reports, some of the more prominent are the number of families the unit houses, number of bedrooms, number of bathrooms, total number of rooms, square footage, the size of the lot, and whether it has a driveway, carport or garage. They also do comparisons with similar properties sold in the last year within the vicinity; for rural properties the applicable vicinity is a 2.5 mile radius, while for urban properties the vicinity is a one mile radius (see page 99 for that portion of the sample appraisal).
When an appraiser is generating an appraisal, she argues and must prove that the property is worth what she says it is. The judge who will decide whether the appraiser proved her argument is the bank’s underwriter (the individual who approves mortgages for given banks). Even so, not all underwriters use the same criteria; one could approve a given appraisal while another rejects it.
The main thing underwriters look at in an appraisal is the sales comparisons of similar properties within the same area. The closer the ‘sales comps’ physically are to the property in question (speaking in terms of geographic distance, structural configuration, and condition), the stronger the appraisal. Appraisers must supply three sales comps per appraisal. If the underwriter believes the appraisal is weak, he may ask for one or two more sales comps. Further, appraisers must compare “apples to apples.” If the property next door was used as a comparison but needed repairs that the subject property did not, then the price must be adjusted accordingly.
With the above in mind, you should always look for sales comps no more than one mile from an urban property, no more than two and a half miles from a rural property, and which have sold within the last year (the last six months is even better). So you’re probably asking, “How do I determine how far a property is from the house I’m trying to price?” Easy! Just go to www.mapquest.com, click on “driving directions,” enter the address of the subject property, enter the address of the potential sales comp under “ending address,” press “enter” on your keyboard, then the distance between properties will appear at the top of the screen! While I have had banks accept appraisals from my appraiser with sales comps greater than a mile radius in urban settings, my appraiser was able to provide great explanations as to why he had to go beyond the standard radius. It is important for you to find a competent appraiser as well, who will work with you in establishing legitimate, acceptable, and defensible values for properties.
Another way to find sales comps is to use online information portals such as www.Zillow.com Type in the name of the city, the street of and streets near the subject property; as you do, lists of properties which have sold in these locations will appear.
The best way to identify sales comps is to visit a realtor and have her look them up on the Multiple Listing Services (MLS). As mentioned previously, the MLS is something like a marketplace in which realtors place all their listings. Further, these listings must include detailed data, like number of families, number of rooms, bedrooms and bathrooms, lot size, year built, comments on the overall condition of the property, and sales price. Real estate brokers are required to do this by law. Isn’t this fantastic? The MLS gives you just about everything you need to get an accurate value for any property you’re considering (as a matter of fact, this is the primary tool appraisers use for comps). The problem is, only real estate brokers, agents, and appraisers have access to it.
I am not going to lie and tell you that getting sales comps is as easy as calling a local broker and asking him to fax over three sales comps on a property. It does not work that way unless you have family or friends who are real estate agents. You need to realize that in this business, just as in any business, no one does anything for free.
A good strategy for accessing the MLS is to contact a local real estate agent and inform her that you buy and sell a lot of property. Then state that if she is willing to supply you with sales comps when you need them, you will begin listing properties with her. This will get the agent excited and she will likely help you in any way she can.
RESIDENCE TYPE
A general rule you must recognize is that single family homes are the most difficult type of residential property to price. Why? They can be so different from one another. In many neighborhoods of these homes, no two houses are alike. The designs may all be different; the years they were constructed may vary; the condition of the property, number of rooms, number of bedrooms, bathrooms, and so forth can all differ.
Further, many residents of single family homes take the prerogative of remodeling their homes, adding bathrooms, in-ground pools, and every other imaginable addition. Some additions increase a home’s value; others do not and may even decrease the value. Speaking of additions: Whether they be lofts, family rooms, or pools, virtually every form of addition has to conform to some type of building code. The building code which applies (city, county, or state) will differ depending on where property is situated. In any case, your concern as a real estate investor seeking to determine the value of a property is twofold:
1) Does the addition meet the applicable building code?
2) How does the addition affect the value of the property?
Compliance with code can be determined in several ways. The owner may have records of the building plans and of the approval of the plans and construction by an approved agency. If so, all is well, and you are left only with determining the affect of the addition on the value of the property.
If the owner does not have such records, he is legally required to acquire documentation certifying that the addition does or does not meet code, and then supply that information to the buyer (at least with all forms of property other than REOs).9 If sufficient records of the addition are unavailable on REO property, you will need to contact the governmental agency which oversees building codes and ask them to examine their records. If they have no record of certifying that addition, you will need to request a physical inspection of the addition by an approved inspector. If the addition does not meet code, you must determine the cost of repairs required to meet code. The governmental inspector may be able to supply you with a rough estimate for repairs, which would at least be close enough for you to determine whether the property is worth your continued attention. If a more exact estimate of repairs is needed, you will have to enlist the services of a building contractor (a topic which is covered below under “Calculating Repair Costs”). As REO property is sold “as is,” code accommodating repairs can be so extensive and expensive that you may just have to forget the property and move on. On the other hand, costs of any necessary upgrades in all other forms of property can be included in your negotiations with the owner. Don’t forget, additions which are well done and meet code can actually increase the value of the home. A chart of how specific repairs and/or additions affect property value can be viewed in the“Repair Issues” section.
So as you can see, the variability inherent in single family homes can make them challenging to valuate. Multiple family homes are easier. As a matter of fact, the more REO property is sold “as is,” and the owner bears no legal responsibility for the condition of the property.
However, in all other forms of property, the owner must disclose the condition of the property, including any problematic conditions. This information is commonly revealed in a “Disclosure Statement.” Thus, with all property other than REOs the owner must provide information as to the legal and structural status of any additions.
The families a residence is designed for, the easier it tends to be to valuate. Condominiums are easiest. Designed to house four or more families per structure, there are few changes or improvements condo owners are allowed to make. Their homeowner agreements simply do not allow for it; even if the agreements did allow it, the nature of the structures doesn’t. Further, there are usually few different models in a given area, making comps more feasible. The variances between one condo and another, and their affect on value, are also easily determined. Amenities like wood floor, fireplaces, and garages, of course increase the value of the property. Number of bedrooms, bathrooms, square footage, age of the structure, and location are also, as with other properties, crucial determinants of value. But because condominiums are otherwise so comparable to one another, generating accurate values it is just easier.
Townhouses, which are typically two-family units, comprise something of the middle ground in the valuation game. Like condos, they usually have a limited number of designs within a given area. This accommodates comps. But unlike condos, townhouses often have room for at least some improvements or additions (as allowed by homeowner groups). Basements may be finished off, garages may be dry walled, bathrooms may be added, yards may be landscaped, and so forth. These require the same attention as do those in single-family homes. And certainly, square footage, number of rooms, location, and other factors common to residential properties must be considered.
SECRET VALUATION TOOL
When I first started out in this business, I used the methods I just described. I drove around looking for properties for sale, called the listing agents to get as much information as possible on the property, went to the Hall of Records to get sales information, and most importantly, I worked with a realtor who gave me sales comps.
All these methods served their purpose — I found out what I needed to know about property values — the problem was, they were too time consuming. And “time,” as the saying goes, “is money.” I didn’t want to spend so much time determining property values when I could be spending it locating more properties to buy and sell for big bucks. After many years of testing different methods of valuating property, and of dealing with companies which supply such information, I finally discovered a company that met my needs in a winning way — DataQuick. This little company is a secret of real estate success. If you want to jump-start your real estate investment career and take advantage of years of hard earned experience, become a quick subscriber to DataQuick services. You can find the special offer from dataquick in the toolbox section of the members area.
DataQuick has a fantastic, extremely valuable program called “PropertyFinder with ClickComps,” which is a “supercharged property and ownership research tool that utilizes an intelligent search feature. This feature enables you to find the names and addresses you’re looking for faster and easier than ever before! Once you’ve found what you’re looking for, PropertyFinder generates your choice of reports, including sales comparables with market analysis, profiles, property histories and assessor’s parcel maps!”10 Another great thing about PropertyFinder is its ClickCompsTM technology.
“ClickComps goes beyond AutoComps by allowing you to modify the parameters of your sells comparables.” This would allow you, the real estate investor, “to target additional properties as part of the valuation process.” Rather than rely only on the computer’s 10 The quotes in this paragraph are from the DataQuick website, www.dataquick.com.
With selected matches, you “can target homes with slightly different characteristics to capture a complete perspective” of the property you are seeking to valuate. The cost of using DataQuick’s program is $99 per month, and it is well worth it. While I made a fortune in real estate before ever discovering this service, they simply make it easier. Whether you decide to use them or not, is obviously, entirely up to you!
Another fine feature PropertyFinder offers real estate investors is that you can now discover the owner of an abandoned property without visiting the tax assessor’s office. All you need do is type in the address and within a few seconds the owner’s name and mailing address appear. Then just mail the owner a letter. With the same service, you can also find out when the owner purchased the property, for how much, and what the mortgage on the property was! So as you can see, PropertyFinder is a wondrous service that provides real estate investors, like you, valuable information.
INSPECTION PROCESS
One question must certainly be answered in all of this: How can I determine what does or does not need repaired in a given house? The answer can vary, depending on your level of experience and general know-how when it comes to construction and edifice components. If you are mechanically inclined and have experience working with housing construction, you can save yourself lots of money by inspecting most of the building systems (basic plumbing, flooring, siding, etc.) yourself. Many repair needs will be obvious. Either the heater works or it doesn’t. The plumbing leaks or it doesn’t.
Windows are broken or intact. There is usually little need to go looking for problems that aren’t apparent. If you don’t notice them, likely no one else will.
Professional Inspectors
On the other hand, if you couldn’t fix your way out of a broken mouse trap, and don’t know shingles from siding, you are best off leaving all property inspections to professionals you trust. As far as working with inspection professionals, there are a range of options available to you. On one end of the spectrum are engineer’s reports, in which a licensed engineer walks through the property, inspecting it for any form of deficit; but you must remember that an engineer’s primary expertise is in fundamental structural areas. He is not likely to report that the carpet needs replaced.
On the other end of the spectrum are handymen. These are fellows who have varying degrees of experience and expertise in fixing or renovating household problems. Some are very good at what they do, others are not. When doing a walk-through a good handyman can inform you of almost any problem the house might have, whether it be with sinks, toilets, countertops, window screens, or linoleum floors. When it comes to significant, expensive to fix problems, however, like roofs, major plumbing or electrical, you are better off listening to someone more expert.
The best inspections you can have done will be by either a general contractor or a licensed home inspector. Contractors are individuals experienced and state licensed in the construction business, and inspectors are licensed by the state specifically to perform inspections. Either professional knows their stuff. If at all possible, schedule the inspection with one of these gentlemen so that you can accompany them. You will be amazed at what you can learn in a few short walk-throughs with one of these guys.
Some pitfalls to avoid are associated with zoning and environmental elements; they can squelch the value of a home in a hurry. Potential zoning problems, such as conflicts with right-of-ways for streets, highways, or electrical lines, can be uncovered by simple phone calls to your Department of Transportation and appropriate utility companies. Environmental hazards, like radon, asbestos removal, or ground contamination from nearby storage tanks or dumps, can be identified through calls to your local Hazardous Materials or Health Department. In most instances, actual inspections are not required for these agencies to apprise you of potential hazards (except perhaps radon), as they can be readily surmised simply by the neighborhood in which the property sits. If there is any question or concern, you can, of course, request an inspection. A great benefit of using an appraiser is that they are usually familiar enough with particular areas homes are located in that they know of likely environmental hazards. Additionally, most appraisal forms include specific reference to these issues.
An instance in which professional property inspection is particularly necessary is when you are exploring the purchase of REO property. Why? As mentioned above, these properties are unique in the real estate industry, in that they are sold “as is.” Unlike owners of other forms of real estate, REO owners are not required by law to specify or warranty the condition of the property. In other words, the buyer assumes all risks and liabilities associated with the property upon assuming ownership. The importance of this to you should be obvious. Hidden problems, like flawed or sinking foundations, dry-rot in the wood framing or structural supports, or termites, end-up being “your babies” to fix.
Do not fail to hire a professional inspector to assess REO property. One facet of inspections that can benefit you when it comes time to sell your property is that many (termite inspections, for example) have a time-frame associated with them. That is, if the person you bought the home from had a specific inspection performed prior to selling it to you, and you then sell the property within a few months after buying it, those same inspections likely count as valid and there is no need for you to pay for having them repeated! So be sure to check your closing documentation for inspections which have recently been done, then cross-reference that information with inspection requirements for your area.
Inspecting Property Yourself
If you tend to be a do-it-yourselfer, or have experience in housing construction, you can perform many or much of inspections yourself. Even if you plan on hiring all your inspections done, you should know what goes into one so that you can approach the whole process from a position of knowledge. It will also help you assess if your hired inspector is doing a good job or not. Inspections should be done in a methodical, step-by-step fashion, so that you don’t miss anything. Actually, the best way to insure that you don’t miss something is by creating and using a checklist. While the variances in house construction can make a universal checklist difficult to create, the many features that houses have in common make for at least a representative checklist. You can use the pointers I give you below as a guide for your checklist.
Remember, the reason you are inspecting property is to determine whether purchasing and then quickly selling the property will be profitable for you. This being so, your aim is to determine how much it will cost to renovate the place into marketable condition. Because anyone looking at the house, including future potential buyers, will begin looking at it from the outside, the exterior is a good place to begin your inspection. First, driveways and walkways: All clutter must be removed, including any weeds or grasses. If the driveway is concrete, oil spots or other obvious stains should be removed. If the driveway is made of black top, oil spot removal can be more difficult, but should still be attempted on bad, unsightly stains. A fresh layer of asphalt quickly solves these problems, but is not cheap. Walkways must also be clean and clear of weeds and debris.
Front and back yards: If feasible, all weeds should be removed. At a minimum, any existing lawn should be green, trimmed and mowed. Bushes must be trimmed and leaves raked. Any clutter must be removed. Dead plants and trees must be removed. Fences should be in good repair, and missing slats replaced; if there is a front gate, it must be functional.
Front and/or rear porches: Any screens must be free of holes, clean, and taut. Any doors must function well, and be clean or freshly painted. Windows must be squeakyclean. Wood floors must be in good repair, clean, or repainted or stained, as necessary.
Roofs: It should be straight and flat. Rolling, leaning, or uneven roofs indicate poor construction, weakening wood structures beneath, or just age. Shingles should be intact, flat, and even; if they are not, partial or complete reroofing may be in order (which you could only determine for sure via professional inspection). One aspect to roof inspection is actually done from the inside of the house: carefully examine the ceilings of all rooms immediately underneath the roof (i.e., the second story ceiling of a two-story house) for signs of water damage. It is virtually impossible to discern a leaky roof from the outside. If the homeowner is available, ask how long the present roof has been in place. A 15 to 25 year lifespan is normal for roofs.
Gutters and downspouts: While you might normally consider the condition of gutters and downspouts important only if you intend to keep the property for a long time, this is actually not the case. Why? If these features are in poor condition, particularly in wet climates with poor soils, they can result in significant structural damage to a house by causing the foundation to settle, crack, or break. Problem foundations can be very expensive to fix. So pay attention to the condition of gutters and downspouts, e.g., that they are intact. In the absence of rain, the functionality of this system can only be checked by spraying water from a hose onto the roof and seeing if it comes out the spout and runs away from the house. What it should not do is spill over the gutter onto the ground.
Foundations: What you should look for here is proper drainage. That is, the grading of the soil surrounding the foundation should allow for the drainage of water away from the foundation. If this is not the case, problems can occur with the foundation as mentioned above in “gutters and downspouts.” Also, if the property includes a basement, poor water drainage can contribute to bowed walls and even flooding in the basement.
Decks: If the house has a deck, you need to check it for structural integrity. Missing, cracked, or broken flooring needs replaced. The stairs should be sturdy. Check foundation support beams for dry-rot, particularly at their base. If the wood surface looks bad, re-finish it.
Walls: Wood siding should be straight, without bulges or large waves. Paint which has been neglected a long time, which has chipped and flaked off, is very hard on siding; exposure to the elements deteriorates wood quickly. If this deterioration is excessive, the siding may need replaced. Otherwise, the siding and old paint must be properly treated and repainted. With brick walls, pay particular attention to the mortar between bricks; if it is loose or falling out, significant repair could be required. Also make sure that brick walls are flat and straight, without any large cracks.
Paint: Unless new or nearly new, the entire exterior will need repainted. Nice mild, neutral colors are best (white or off-white). Trim can be of a different color, but stay away from gaudy, unusual colors.
Garages: There are two main things here: the floor and the door. Like the driveway, the garage floor should be cleaned of any oil stains. The door should operate smoothly, not being difficult to lift or close; and when in the raised position it should not easily close on its own. If a garage door opener is installed, make sure you have the correct remote openers, and that they work (if they don’t, the batteries may simply need replaced). If the face of the door is warped or broken, replace it. Now let’s make our way to the inside of the home.
Doors: Front and rear doors must be in good repair, particularly the front. Install a new door knob and lock set on the front door, and at least a new lock set on the back door. Also check the door jams for any signs of forcible entry; repair as necessary.
Basement or crawl space: As mentioned above, check for bowed walls or signs of entering moisture in the basement (both are bad news). Windows must be intact and have secure locks. Regardless of whether the property has a basement or crawl space, this is the place to inspect many plumbing and electrical lines, as well as heater and/or air-condition ducting. If termites are a problem, their signs can usually be found here.
As crawl space inspection can be a dirty job, you will probably want to hire someone to do it; besides, many of the systems which deserve inspection require the expertise of a professional inspector.
Windows and screens: Windows must be intact, squeakyclean and free of cracks and bulls eyes. Screens must be intact, clean, free of tears, and taut. Sliding glass doors should roll smoothly and lock securely.
Flooring: Carpets must be clean and odor free. If there is any question of their condition, they should be replaced. Gaudy colored carpets should be replaced with mild, neutral colors. Linoleum should be sparkling clean, free of defects, or new. Wood floors should have no major defects and a finish which is not obviously worn. Stairways should be safe and sturdy; fix any significant squeaks.
Electrical system: Not being a professional electrician, the most you can really do is check to see that electrical components in the house work. Bring along a small radio or lamp, then plug it in to all the electrical outlets to verify that they work. Also check all the lights, fans, electric ovens, air conditioning and heating systems. If there is any question as to the soundness of any electrical system or component, a professional electrician should be hired to complete the assessment.
Plumbing: Make sure all faucets have water, and that there are no leaks from the faucets or underneath the counter tops. Check the garbage disposal to make sure it operates. Toilets should be silent when not operating; flush to make sure they work.
Unless in new or like new condition, it is best to replace toilet seats and lids. Similarly, unless faucets are new or like new, it is best to replace them. Also check the showers and tubs for water flow and shut off. These places are particularly prone to mold and mildew; make sure they are spotlessly clean, with new calking as necessary. Sinks or tubs that are cracked, broken, or stained should be repaired or replaced (porcelain can be effectively repaired by skilled technicians), especially the kitchen sink.
Walls: Walls should be free of holes and other defects. Repair drywall as necessary. The entire interior should be freshly painted white or off-white. Houses in which tobacco smokers have lived are particularly difficult to repaint and rid of odor; they usually require extra cleaning and priming processes.
Counter tops, drawers, and cabinets: Whether in the kitchen or bathroom, counter tops, drawers, and cabinets must be spotlessly clean. Gaudy colors should be replaced with mild, neutral colors. If cabinets cannot be sufficiently cleaned up or refinished, the least expensive alternative is to replace the outer doors. Replacing entire cabinets can be expensive.
CALCULATING REPAIR COSTS
An integral part of determining the value and potential selling price of any property is the issue of repairs. That is, unless a home is in new, near new, or recently renovated condition, it likely needs repairs. Whereas in the above section you were told how to determine just what repairs need completed, here we will explore the issue of repair costs.
When considering repairs on any property, several factors come into play. For one, repairs which pertain to the safety of the home are essential. Structural problems with foundations, load bearing walls, floors, stairways, ceilings, roofs, and hazardous electrical systems definitely need to be fixed. The health and lives of future occupants depend on it. Other repairs, though not safety-specific, are nevertheless necessary, as they pertain to the basic functionality of the home. Plumbing, sewer systems, roofing, heating, air conditioning (in hot climates), and water supply fall under this category. The third category of home repairs includes those things which if in good condition make a home more attractive, pleasant, and livable, such as: interior and exterior painting, exterior siding, interior walls, landscaping, windows, and floor coverings. Though at first blush this third category may seem less essential than the others, it is actually just as important if you intend on selling the property — which of course, you do. While structural integrity and functionality are basic to sound housing, here in America, aesthetics are also vital. You will have little success selling a house that looks junky, even if it is safe and functional.
Repair Issues
Now that you know how to determine what needs fixed, the questions are: How can I find out how much particular repairs should cost? And how can I keep from getting ripped-off by repairmen? Included below is a moderately extensive list of typical repairs and price ranges you can expect for those repairs. You need to remember, however, that repair costs vary widely. Where you live, who you have do the work, the working relationship you have with area contractors, and even the time of year can all effect how much repairs cost. My home turf, New Jersey, has some of the highest construction costs in the country; but because I have regular contractors I work with and with whom I have a good business relationship, I get as good a deal as possible. To help keep you on the level, the prices listed below are an indication only.
ADDITIONS COSTS
Build Addition $50-$120 per sq. ft.
Enclose Porch $3,500-$15,000
Drywall Ceiling Over Plaster $1.50-$2.00 per sq. ft.
BASEMENT COSTS
Convert to Legal Rental Unit $15,000-$50,000
BATHROOM COSTS
Remodel $1,500-$12,000
Add Half Bathroom $3,500-$5,000
Add Full Bathroom $5,000-$12,000
ELECTRICAL SYSTEM COSTS
Increase Service to 200 amps $700-$1,200
Run Separate Electrical Lines $150-$300
EXTERIOR COSTS
Regrade Lawn $500-$1,500
New Gutters and Downspouts $2.00-$3.50 per linear ft.
Brick Laying $27 per hour
Vinyl Siding Installation $4.50 per sq. ft.
Deck Construction $12-$15 per sq. ft.
Deck Staining $4 per sq. ft.
Fence Installation (chain link) $8-$10 per linear ft.
Fence Installation (wood) $10-$12 per linear ft.
FIREPLACES COSTS
Build Masonry Fireplace $3,300-$4,800
Install Prefab Fireplace $1,800-$2,300
Reline Chimney with Terra Cotta $2,000
FLOORS COSTS
Sand and Finish Wood Floors $1.50-$3.30 per sq. ft.
Install Ceramic Tile Floor $7-$22 per sq. ft.
Install Vinyl Tile Floor $2-$5 per sq. ft.
Install Wall-to-wall Carpet $3-$7 per sq. ft.
GARAGES COSTS
Build Single Car Garage $6,000-$9,500
Build Double Car Garage $8,000-$18,500
HEATING & AIR CONDITIONING COSTS
Replace Warm Air Furnace $1,500-$3,800
Replace Electric Heat Pump $2,200-$3,600
Replace Central A/C System (electric) $1,500-$3,000
Replace Central A/C System (gas) $2,600-$3,500
Install Humidifier $300-$500
Install Electrostatic Air Cleaner $500-$750
Replace Hot Water Boiler $2,500-$3,500
Install Attic Ventilation $250-$450
INSULATION COSTS
Insulate Attic/Basement $.75-$1.20 per sq. ft.
INTERIORS COSTS
Sheetrock and Thin Coat $1.50-$2.50 per sq. ft.
Painting $3.50 per sq. ft.
KITCHEN COSTS
Remodel Kitchen $10,000 and up
PLUMBING COSTS
Hot Water Heater $300-$650
Install New Well $3,000-$5,000
Install New Septic System $3,000-$5,000
Install Sump Pump $400-$500
Install French Drain and Sump Pump $2,000-$3,500
ROOFS COSTS
Asphalt/Fiberglass Shingles
Over Existing Shingles $1-$1.20 per sq. ft.
Remove Existing Shingles and
Install New $1.30-$1.75 per sq. ft.
Leak Repair $40 per hr.
WINDOWS & DOORS COSTS
Install Storm Windows $60-$100 each
Replace Existing Windows $120-$250 each
Replace Large Bay Window (10’ x 6’) $1,000
Decorative Entry Door Installed $500
Interior Door Installed $80-$110
Some repairs add to the value of the home more than others. Interestingly, this does not always or even often correspond to the ‘necessity’ of the repair. For example, kitchen remodeling, though often unnecessary, adds far more to the value of the home, per dollar spent, than reroofing, which can be necessary! So in the list below, I have included “recovery costs,” which refers to how much of your repair money you can expect to get out of the property when you sell it. Here’s an example: You spend $10,000 on a kitchen remodel. Because you can generally get 80-100% recovery costs for kitchen remodels, that means you should be able to add $8,000-$10,000 to the price of the home when you sell it. The math looks like this:
$10,000 (kitchen remodel costs)
x .80 to 1.0 (80-100% recovery costs)
= $8,000-$10,000 (increased value of home)
92
The point is, unless a repair is necessary either for safety or functionality, do not make it unless it sufficiently adds to the value of the home. Here is a list comparing repair or improvement costs versus recovery costs.
Type of Improvement Estimated Cost Recovery Costs
Labor & Material
Major Kitchen Remodeling $6,000-$12,000 80-100%
Minor Kitchen Remodeling $1,800-$6,000 80-100%
Bathroom Remodeling $2,500-$6,000 50-75%
Bathroom Addition $5,000-$10,000 50-80%
Bedroom Addition $6,000-$15,000 65-85%
Two-car Garage Addition $8,000-$18,500 33-50%
Two-car Carport Addition $7,500-$10,000 10-50%
Energy-efficient Fireplace $2,500-$3,500 80-100%
Energy-efficient Windows & Doors $3,500-$8,500 0-20%
Exterior Painting $1,000-$2,500 30-80%
Exterior Re-siding $6,000-$8,000 20-40%
Landscaping Improvements $500-$3,500 40-60%
Swimming Pool $9,000-$17,500 0-40%
Minor Reroofing $1,500-$2,500 0-20%
Major Reroofing $3,000-$4,500 0-20%
Patio Addition $1,500-$4,000 35-60%
Interior Painting $1,000-$3,000 30-80%
Along with the above guidelines, a nifty resource to help keep you from getting ripped-off by shady repairmen or contractors is www.costestimator.com. They do a great job of specifying costs for particular repairs, even taking geographic variances into account.