This week, we chatted with Michael Vargas, President and CEO of Vanderbilt Appraisal Company, a Manhattan-based appraisal firm. Michael has 20 years of valuation experience and his company has completed over 50,000 valuations in the tri-state area. Michael helped us shed some light on one of the most fraught aspects of any home purchase or sale: the appraisal. While the appraisal itself generally occurs as an owner is preparing to sell or refinance a home, most homeowners in the Sweeten community have an eye on future appraisals as they are designing renovations, even when they plan to enjoy their project for years.
Featured photos come from a Windsor Terrace, Brooklyn renovation by Sweeten Expert Alexandra B.
What are the elements that you assess when calculating the value of a home?
Michael: The most important factors in the New York City market are location, size, architectural style, number of bedrooms, and overall condition of the home. We also consider kitchen and bath renovations, amenities, view, and natural light.
What do homeowners get wrong when thinking about the value of their own homes?
Owners tend to think about their homes in an emotional sense: there are often elements of a home that an owner treasures that may not necessarily translate to the value that the owner has assigned. For example, extras like a fireplace, balcony, storage, or custom-designed walk-in closet may indeed enhance value, but the gain may not correlate directly to the original cost of the work or to the owner’s sense of emotional worth. An individual owner may have been willing to spend a significant premium for a special amenity but the general market of buyers may pay far less of a premium upon resale.
That makes sense. The New York Times recently published an article about how very personal renovations can be hard to sell. What can you tell us about appraising those kinds of properties?
Anything a seller does to limit the pool of potential buyers can lead to a discounted sale price. When a homeowner creates a highly personalized style, buyers tend to treat the property in the same way that they would an un-renovated property; they seek to extract the cost to re-do the renovation so that they are not over-paying for a property that will ultimately require significant work.
Tell us more about how you would factor a more typical, straight-forward renovation into the value of a home.
The level and condition of a renovation is one of the most vital components in determining the value of the home. We look at the cost of the renovation, consider typical costs for a similar renovation, and assess the time frame since the renovation was completed.
A newly-renovated property can carry 100% of the cost of the renovation to the overall value of the home. As time progresses, the value of the renovation tends to diminish on the scale of approximately 20% every three to five years. After you pass the ten-year mark, the value of the renovation tends to drop dramatically.
What can homeowners do to increase the value of their homes?
The most value-enhancing renovation projects are kitchens and baths. A newly-renovated kitchen and bath can increase the value of a home by as much as 100% of the cost of the renovation.
So, if I renovate my kitchen for $30,000 and my apartment was last priced at $330,000, can I assume that the new value of my home is $360,000?
Yes – you can make that assumption, but remember that the market is not static; market prices can fluctuate. If market prices are rising and you spend $30,000 to renovate your kitchen, the new value of your home is $360,000 plus the amount (or percent) of market price inflation. Of course, the reverse can be true, during a market downturn, the value attributed to a renovation can decrease along with the home’s selling price.
Homeowners renovating with Sweeten want to gain and maintain that value in their home after a renovation. Do you have any tips on how to do this?
Most owners will see an immediate increase in value upon completion of a renovation project. During an appraisal, the owner should clearly call out the scope of the renovation as well as the related costs to the appraiser to ensure that the appraiser is accounting for the value of the work in the assessment.
We’ve been hearing for almost two years that New York City has very low inventory. Can that affect the appraisal?
The market in New York City is at historically low inventory levels. This situation tends to lead to rising prices, but it can also contribute to stagnation in the rate of sales. Demand can dissipate when buyers have such limited choice and are unimpressed with the quality of the properties on the market. Over the long term, however, we tend to see value escalate when inventory is low.
What determines the value of a home in Manhattan versus Brooklyn? Is there a difference that you can attribute to neighborhood?
The value of any home – whether it is in Manhattan or Brooklyn – is determined by the “principle of substitution”: the notion that the price of a home is set in accordance with other comparable, or “substitute”, properties. Market prices are ultimately localized, so owners and buyers should not directly compare homes in these two markets.
However, we have seen that what transpires in the Manhattan market can have an impact on the Brooklyn market. When market prices rise significantly in Manhattan, prime areas in Brooklyn also tend to rise. Although there has been recent convergence of value – some Brooklyn areas have comparable values to some Manhattan areas – there is still a large variance in value between the most valuable homes in Manhattan versus Brooklyn.
So, is now a good time to renovate or sell?
Given that inventory remains so low, market prices are likely to continue to rise over the next six to twelve months. This is a great time to renovate a property with an eye toward a future sale because by the time you complete the project, the net gain in value will be higher than the cost of the renovation.
Photos: All featured photos are from a Windsor Terrace, Brooklyn renovation by Sweeten Expert #2901, Alexandra B.
If you’re ready to start your own renovation project, post on Sweeten to be matched with Experts who are perfect for the job!
“Renovations can be painful. Sweeten takes the hassle and guesswork out of the process. Overall it was a very pleasant experience and we are thrilled with the end product.”
-Ben C., Brooklyn Heights homeowner
What do you do when you realize that your bathroom is just not working for you anymore? Ben & Therese’s Brooklyn Heights bathroom wasn’t even 10 years old before they recognized that the space was ugly, outdated, and felt cramped — even little Enzo (pictured above) didn’t want to bathe in what he regarded as a cheap, generic tub — it was time for an update.
The couple took a savvy approach, collecting enough inspiration and research online that, together, they were ultimately able to design the bathroom of their dreams and a space that would reflect their personal tastes. They even built a 3D model of their ideas using Google SketchUp to help them plan and visualize the space; according to Ben, ”we didn’t want to leave anything to chance, and we wanted to make sure we utilized every square inch as best we could.” With their very real vision, Ben & Therese were more than ready to renovate, so they posted their project on Sweeten to be matched with a contractor who would help them finish the job.
Ben & Therese moved forward with their first match who was just the right fit for the project, and in just 4 weeks, Sweeten Expert Aleks and his team were able transform the generic bath into the homeowners’ inspired vision. Here’s their space before & after:
The couple took a universal ideal of clean, simple and modern, but made a space that is uniquely theirs by incorporating industrial elements like cement tile & shower doors on sliding hardware, and adding a splash of color with Moroccan-inspired flooring tiles. Ben even says that it feels bigger and more open after renovating (a big plus in BK), not to mention that it’s much more functional. I love it, they love it, their friends love it, and little Enzo couldn’t be happier — sounds like a win!
Great work to Aleks & his team — and big congrats and many thanks to Ben, Therese & Enzo!
Jealous? Post on Sweeten to get matched and start renovating!
Yesterday we launched our new, interactive renovation maps on Sweeten! We’re super excited about the project, and, already, so are our friends at Curbed, Brownstoner, & Gizmodo! We’ve mapped all of the projects posted on Sweeten along with the last 10 years of alterations permits filed with the NYC Dept. of Buildings.
Each dot on the map represents one building address, and by clicking on an address you can view the full record of each renovation in that building — including the owner, permit applicant, a description of work, the estimated cost of construction and filing fee, along with a link to the original DOB digital filing. Go to your building and see all the renovations on file …or on your block, in your neighborhood, or zip code!
We designed these maps to help the entire Sweeten community better understand the current renovation market, as well as how it changes over time, and we’ll be creating followup posts highlighting renovation investment trends that we see in neighborhoods across all five boroughs. We are also offering an email alert service for our “insiders” to receive monthly email updates on any new renovations filed in your list of watched addresses. Insider accounts are $10 per month. You’ll be automatically informed of work in your building, or any building on your watch list.
A fun fact for anyone curious about the map’s color palette: after a few trials that weren’t quite right, Jean used the orchid on her desk as the final color inspiration— doesn’t it look great?!
The new maps are just one of the many educational features we’ve been developing at Sweeten to help our community better understand the renovation market here in NYC. Check out the project and let us know your thoughts in the comments below! http://sweeten.com/maps
Ever since Billy & Sally came to us with their cramped Clinton Hill kitchen last year, we’ve spent a lot of time Sweetening homes in the Clinton Hill co-ops. One of the most remarkable things about these projects is that they all start with the exact same, 1940′s bones, but by the end, no two of these spaces ends up anything alike. I personally cannot decide which of these kitchens I love most, but one thing is for sure, they have all come a very long way! Have a look at these three renovation outcomes and let us know which you like best.
Kitchen #1: Billy & Sally’s Stylishly Curated Kitchen
Kitchen #2: Kyle & Angela’s Mid-Century Inspired Kitchen
Kitchen #3: Light & Modern, Family Kitchen
Let us know which you like best in the comments below (–and check back in a few weeks to see how this one finished up)!
You know that sort of childish feeling of being so excited about a future event that it actually seems to slow down time, and the only way around it is to put it out of your mind until the moment finally arrives? Whether the timeline is 2-weeks, or 20-months, renovation projects epitomize this trial of patience — and in following so many of them at Sweeten, we always have so much to anxiously await!
For me, Milktrout’s gut renovation in Gowanus has been the ultimate test. We’ve had this project on our radar since construction began last fall, and I made my last visit to the site while it was under construction back in January, at which point, things were really taking shape… and I already, seriously, could not wait. The project finished up on time this past spring, which meant between moving in, getting settled, and the natural slack brought on by summering, this fall would be it! At long last, after a very patient run (–I’m just kidding, I’ve been totally impatient), Milktrout firm owner Kent Johnson along with homeowners JD & Meaghan recently invited us back to check out the finished space, and I couldn’t be happier to say that this home fully exceeded my expectations. (more…)
Nate & Michelle had just about finished settling into their Greenpoint condo last spring, when it came time for the new homeowners to tackle their unfinished roof deck with its killer skyline views. The couple, both creative professionals in advertising, posted on Sweeten to find someone who could help convert the derelict roof into an extension of their home — an outdoor room with comfortable seating and plants to soften up the space. We introduced them to a few matches, and before long, they awarded their project to Sweeten member Hutson Landscape, owned by Corey Hutson, whose expertise in landscape design & construction was a perfect fit. When we stopped by to see how the project turned out, Nate, Michelle, and their bouncy labradoodle, “Kid,” were setting up to host some friends on their renovated roof. (more…)
Home School is a series of design stories and giveaways we run in partnership with Brooklyn Based, the best source for events, food and cultural news in and around Brooklyn. For the latest installment of Home School, we share some ideas about thoughtful design for kids’ rooms. Read on and enter at the bottom for a chance to win a Growing Up with Design prize package worth over $2,100. Details below!
Great design isn’t just for grownups — in fact, kids are notorious for wanting whatever it is that the grownups have, so it’s only natural that they’d envy our well-considered spaces! Here are a few local examples and ideas for designing a fantastic room for a baby, toddler, or big kid.
CREATE UNIQUE STORAGE
This family’s TriBeCa loft (above) underwent a full gut renovation once their daughter was born. Their architect, Olga Bakic, was clever to integrate built-in bookshelves and display niches into the little girl’s room. These details seem almost mature for such a little one, but they’ll be useful for storage and display at any age. When renovating with young ones in mind, it’s always wise to think ahead, sometimes way ahead! If built-ins are out of the question for now, HEARTWORK’s bookcases are a great alternative—they’re perfect for all ages and, since they’re built to last, they make a good investment for the kiddos. (more…)
This week, we’re thrilled to be back on a renovation site under construction where we met up with new tS members, interior design firm, Mendelson Group. The team at Mendelson is a small, closely-knit group of young designers and project managers, lead by firm Principal, Gideon Mendelson. The team’s portfolio is so rich with interiors that are highly personalized and utterly distinct, we could hardly wait to get behind the scenes to learn more about their process! We caught up with the designers during a check-in meeting with their Upper West Side clients. Qian & Mike, a pair of young professionals, hired Mendelson Group after purchasing their 2000 sqft, 3-bedroom condo, looking to renovate the new home for themselves and their expected newborn. (more…)
Many of you know of theSweeten.com as the amazing renovation-matching, content-friendly website that you frequent for several reasons. Perhaps you posted a project to the site, or know of someone who has. Maybe you have read about theSweeten in NY Magazine, or are one of our qualified members. Regardless of what has brought you here, I have a great post in store for you that will provide insight into the inner workings at theSweeten office, through my eyes, the Intern!
My name is Joshua Lee, and I have been enthusiastically spending my summer break helping theSweeten team, while also learning from these prestigious professionals along the way. For the other ¾ of the year, I study Chemical Engineering at Northwestern University in Illinois. I was born and raised in New Jersey and it has been a great experience to work at theSweeten office, not only because of the amazing staff, but because it is close to home. Now that you know a little bit about me, lets dive into theSweeten office! (more…)
Last month, we shared the first-hand renovation story of Lisa Law, a Brooklyn Heights homeowner who used theSweeten to update her crumbling kitchen, and today, we’re excited to share our 2nd homeowner guest post — coincidentally, this story also comes from a Brooklyn homeowner named Lisa who used theSweeten to renovate her kitchen! Lisa B., who works in the architecture & interiors industry, and her husband Brian, a media studies professor & author, had lived in their Kensington apartment for 8 years before taking the leap to renovate their kitchen. The couple posted to theSweeten to find a contractor and were matched with tS member firm Nick Knacks Creative Interiors. Today we have before & afters of the transformed kitchen, along with Lisa’s insightful narrative on the new design and the process of making it happen.
Before renovating, our kitchen had its original, 1960s pine cabinets that were custom built for the space, but had many layers of bad paint jobs and several of the doors didn’t close. We thought about trying to save them, but they were so solidly built that there was no way to cut them down to fit our new design plan. Plus, stripping all that paint off would have been a nightmare. The vinyl flooring was peeling, the wall oven didn’t work, the cooktop was barely functional and it was almost impossible to see what you were cooking since it was stuck in a corner under a metal hood. The countertops were horrible, fake woodgrain formica. When we first moved in, they were even worse — there was contact paper on them, which we were able to pull up, but we were disappointed with what we uncovered!
We needed a gut renovation! Everything had to go, down to the studs, which meant new drywall, ceilings, cabinets, fixtures, appliances, flooring, backsplash and lighting.
I read about theSweeten a while ago in NYMag and kept it in the back of my mind because I knew we were going to renovate our kitchen. Although I worked in the interior design field, most of the contractors I knew were doing high-end renovations in Manhattan. I posted before pictures of my kitchen on the site and theSweeten introduced me via email to three contractors, all of whom I met with and who gave me estimates. They all seemed good, but as someone who knows about renovation, I appreciated that Nick Dillon from Nick Knacks Creative Interiors took extra time to really look at the kitchen, open up the cabinets, anticipate potential problems, and talk in depth about the process. (more…)