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Updated almost 13 years ago on . Most recent reply

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Brad Uricchio
  • Real Estate Investor
  • San Diego, CA
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Adding sufficient "new" value to a rehab?

Brad Uricchio
  • Real Estate Investor
  • San Diego, CA
Posted

Recently passed on a home that needed only light "ginger breading", along with a new A/C unit to bring it to market. While this sounds great at 1st, and might be just the thing for turning a home into a rental, my fear was that we weren't going to be able to do enough to improve the value of the house to appraise to the ARV level that suited the surrounding recent sales. Our holding costs over a 6 month period - buying to selling - would be ~2.5 times the amount to spend on rehab. Is this sound reasoning, or am I missing a great opportunity?

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Mark H.
  • SFR Investor
  • Phoenix, AZ
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Mark H.
  • SFR Investor
  • Phoenix, AZ
Replied
Originally posted by Bill Gulley:
I believe you're on the right track, but you should know before you buy if you can bring the subject up in value to the desired comps, if not and you're selling the runt in the litter, healthy and in good shape, just smaller or less expensive, then you should have an idea about your profits and probably a quicker sale. \

While you may allow someone to assume more work was done, stretching the truth is "fluffing" and against the Code of Ethics for Realtors, so you need to take care in what you claim. Lying or intentionally misleading an appraiser is an attempt to influence the appraisal, IMO and is a violation of law.

Marketing is nothing more than legalized deceit, so long as you don't make false claims, IMO. So, I guess if you handed the appraiser your marketing sheet and said this is my marketing, they may look at it and then again, they may not give it much consideration.

"puffing" is allowed and accepted by the code of ethics for realtors.
"fluffing" is a term used in the adult industry - and while its certain some people expect an agent to perform this service in the course of a deal, it isn't a subject that is taught in re school, nor does the term appear anywhere in the code of ethics.

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