Does Insulating void walls on a century home increase ARV?

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Corbett Brasington · Answer

@Evan Polaski thank you for the reply, I also had an interesting conversation with an appraiser the other day who told me "We only include things we can see, so any electrical updates, plumbing updates, insulation, etc have no bearing on the valuation of the home."  I was rather shocked to hear that myself but it makes sense.    It does put me in an....ethical dilemma, which maybe can be solved through proper disclosures, that if a house has been rehabbed...have the major mechanical systems, and capex been updated also?

Case in point the area where I live has many houses downtown built on cedar post foundations, which are at end of life, and its a hot market, so what it appears is many investors just do nothing with the foundation if the house is within a couple inches of level even though the posts are rotten and will cause structural issues a few years down the road.  That really rubs me the wrong way to play this game of "well we didnt do anything to fix the foundation so we are not liable".  What I think I would be OK with is full disclosure on what was and was not done to the house.  The the sellers can properly make an educated decision, but then how many people would want to buy a house where the foundation is end of life and to fix it is a 20k expense.

The void wall is not that big of a deal as long as the home can properly cool or heat, which I believe just roof insulation and the right tonnage will accomplish.  Really my biggest issue is with the cedar post foundations that are end of life and showing signs of no longer doing their job.

Evan Polaski · Answer

@Corbett Brasington, I agree with that appraiser.  My wife is a designer, so our flips are of higher caliber than many I see.  We get higher prices because of her design, in our markets.  My saying is: design gets a house under contract and mechanicals kill deals.  The buyer will not know if the cedar posts are about to rot through or if the roof is on its last leg.  Hopefully an inspector will see/find those things, and can kill deals. And in this hot market, it might not matter, but in a more normal market, if a house goes pending then back on market, every realtor starts questioning why, and diverts clients away.

Disclosures are very important, and I align with you.  I hesitate to call what my wife and I do, flipping.  We are rehabbers because we remediate knob and tube, we fix rusted sewage lines, we replace a lot of roofs and add insulation in the attics.  We also sleep well at night when we sell a house because we did everything we knew needed done to make the house a great home for the next buyer.  My wife has also built a brand around it, so we have that added level of responsibility.

As you noted, we don't go "out of our way" to mention that we didn't do something, but we are also very conscious to provide accurate descriptions of what was done.  I.e. if we add insulation in the attic, we will mention that new insulation was added to the attic, not a blanket statement of new insulation.

Justin Fox · Answer

@Corbett Brasington

You'll soon come to understand that you're building/renovating homes for appraisers, not buyers.  Buyers get the upgrades and features in a home that an area's appraisers feel they are entitled to.  Now I'm not saying that above-average finishes don't attract more buyers to sign on the dotted line, but unless the appraiser notices that quality, the buyer will still need to bring $$ to closing.  Every house I've sold I've had a stipulation in the contract that I get the buyer's appraisal at closing.  I want to know over time what appraisers value and what they don't.

Evan Polaski · Answer

@Corbett Brasington, note my experiences come from owning many century old homes.  I have never added insulation on my personal residences or flips, beyond my gut level renovations.  I do not believe that NOT having it ever hurt my resale, so would conclude that adding does not help it, unless you literally cannot keep the interior comfortable.

Does Insulating void walls on a century home increase ARV?

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