In 2006, I purchased an apartment with stainless steel appliances, granite countertops, mahogany cabinets, alabaster chandeliers and a host of other amenities buyers covet. I bought it because the space was well proportioned, had a good amount of natural light and was conveniently situated. A week after acquiring property, a second set of renovations began, which corrected what I consider intrinsic design flaws, which could have been easily addressed when the building was being renovated according to market standards for “high end” apartments.
The real estate bubble burst right after this purchase and then in 2008 the economy started tanking and my property appeared to hold it’s initial value according to appraisals made in 2009 and 2011. Fast forward to 2012 and the real estate market is “hot” again in Washington, DC. The time was ripe to sell.
The big question was how much a buyer would be willing to pay for the improvements made to this space? The short answer is nothing, zip, zero. In fact, when an appraisal was ordered, the price placed on the unit was lower than what it had been in 2009 and 2011. Why? Because of what lenders look at as “comparables.” In other words, unless a buyer was willing to make up the difference in cash to qualify for a loan, I’d have to sell for much less than what I bought and on top of that, absorb the cost of the renovation.
After three months I removed the apartment from the real estate market. I’m keeping it. It’s not overpriced, it’s underpriced; without doubt one of the best apartments in DC.
