Adding A New AC And Roof By Ryan Lundquist

Dated: 04/30/2019

Views: 129

How much is that new roof & AC unit worth?

 By  

“I paid $25,000 for a new roof and AC unit. How much is that worth in an appraisal?” I get questions like this all the time and my answer can be frustrating as I say, “It depends.” Here’s my thought process though and why I can’t just rattle off a quick number. Anything to add?

The full amount: A new roof and AC unit are costly, and sellers often want to pass on the full cost to buyers. The idea is, “Hey, I spent twenty five grand, so the buyer is going to reimburse me.” But cost doesn’t always equal value, and it’s not so common for buyers to pay “dollar for dollar” either.

Boring & bling: A roof and AC unit are definitely important, but they’re sort of boring maintenance items instead of bling. What I mean is buyers don’t tend to visit a property and say, “Oh my gosh, did you see that epic new roof? I’m in love.” Nope, they tend to be more impressed with the latest trendy features instead of the age of the roof or AC unit.

Bare minimum: Buyers expect a working roof and AC unit as a minimum. Lenders definitely expect a roof with a minimum of two years of life also. This is why buyers aren’t always willing to pay big bucks for these features because on some level they simply expect them to be adequate already.

Long-term improvements: A roof and AC unit are going to be an advantage for decades, but a buyer might only be in a house for 10 years. So it probably doesn’t make logical sense to pay for the benefit of the entire lifespan of these items in one instance. In other words, the seller has added marathon improvements, but buyers may not pay that during their sprint to purchase.

Location: An AC unit in Antarctica probably isn’t too valuable, so on some level we have to consider location. On a related note, the higher-end of the price market might react differently compared to the lower end of the market. The truth is buyers in some locations or price points are going to be more informed or picky about certain features. Let’s remember energy efficiency can be a factor here too in light of extra savings.

The comps: At the end of the day we have to look to the market for the answers. I tend to consider all the things above, but I also have to be careful not to impose any of my general thinking on the appraisal. Here’s the key. What have buyers been paying for these features? As we look at comps, what seems to be a reasonable amount that buyers would pay? Let’s study comps to begin to get clues about value. 

I know, I didn’t actually answer the question. But that’s not my goal here. My goal is to highlight some important thinking as we try to find the answer.

I hope that was helpful or interesting.

Want to Advertise on this Site?

Latest Blog Posts

Visit The Bank Downtown Sacramento

629 J Street Sacramento, CA

Read More

Big Changes Are Coming To Sacramento Grid

The City of Sacramento's Public Works Department wants your thoughts on a new plan that could make downtown streets safer...By Press Release Desk, News PartnerNov 1, 2019 10:32 am ETFrom the

Read More

Does The Market Really Change Every Seven Years

Does the market really change every seven years?October 22, 2019 By Ryan Lundquist The market changes every seven years. And now it’s ready to take a big turn. Have you heard that?

Read More

How Sacramento Architecture Is Changing Our City For The Better

Even as some of the fanfare has dwindled around the Kimpton Sawyer Hotel and Downtown Commons — unquestionably the most high-profile projects in Sacramento in many years — new developments are

Read More