"Not All Renovations are a Good Investment"

For the life of me, I have never understood homeowners spending a boat load of money to do certain renovations just before a home gets put on the market.

I am doing a mortgage application for clients that are or were in the process of purchasing a home that just had extensive renovations done. Renovations to the tune of $40,000, but here is the problem. When the appraisal was done, it appraised $20,000 below the agreed upon purchase price. Based on the comparable sales, the appraiser did a good job.

I received calls from the listing agent and even the seller explaining the renovations that were done and how much they close. After listening to the advice that was given to make some of these repairs and renovations, many should never have been done, as they were not going to give a return on investment.

In my humble opinion, the seller got some very bad advice from the listing agent and the transaction is going to fall apart. There was no indication that the seller will reduce the price and the buyer is not willing to pay more than the appraisal.

image courtesy of tiramisustudio/freedigitalphotos.net