Evening star., 1938-06-18
REPAIRS TO SELL
HOUSES ADVISED
Federal Agency Points Out
Possibility of Profits in
Wise Spending.

Ine sale OF previously unstable
properties often will result from the
wise spending Of money to recondition
them, the Federal Home Loan Bank
Review pointed out today In an article
based largely on the experience OF
thc Home Owners Loan Corp. in dis
posing Of dwellings it has acquired.
Citing specific cases in which the
H. o. L. c.. by spending sizable sums
TO recondition houses, was able to
increase their value more than the
cost Of work done, the Review con-
cluded:
Large expenditures for recondi-
tsonings are justifiable in appropriate
cases because they produce returns
through increased value and increased
salability.'
While IN one Of the examples point
ed out by the Review the H. o. l.. c.
spent as much as $1,6l9 to make a
property salable, the average recondi-
tioning expenditure on the $4,000
homes which it has modernized and
repaired has been $500.
Losses Substantially Cut.
The Review emphasized that, while
feconditioning had not necessarily
resulted in profit for the H. o,
Ls G. on those properties SO treated. it
had substantially reduced losses which
otherwise might have accrued.
First case of reconditioning cited
by the Review was that of a run
down house in a New England town
which originally was appraised at
$1,000. The community in which it
was located was one where rents
were rising and sales demands were
increasing. Consequently the H. O..
L. c. felt justified in spending 1888
on Improvement of the house. As a
result OF these repairs the property
was reappraised at s4,250. or an in
crease of $l,41l above the price of
reconditioning.
Another example given by the Re-
view was that Of a property located.
IN fair residential section of A
Texas city. In this case $l,6l9, or
SO per cent of the structures original
appraised value, was spent. Founda-
ton piers were rebuilt, a new roof
put on, floors refinished, interior walls
papered and other necessary work
done. After reconditioning, the prop
esty was appraised at 1888 more than
the cost of the work.
Private real estate firms were riven
q word OF warning by the Review,
however, about indiscriminate spend
ing Of money for repairs.
Quality Is Big Factor.
Reconditioning, to be profitable"
the Review said. must increase the
value Of the property above the cost
OF the work done, and must improve
the appearance and attractiveness of
the property 50 as to widen the range
OF potential buyers at the established
price.
"One of the most important factors
to consider in reconditioning is the
quality of the house in relation to the
neighborhood in which it is located.
The difficulty Of selling a $4,000
house in a $4,000 neighborhood will
be elaborated upon by any real estate
agent. and Is the basis of an axiom
IN reconditioning: When the value of
a property is below that of surround
ing houses 1t is frequently possible to
spend money on improvements to good
advantage, but when the value is
greater than its neighbors, major ex-
penditures are seldom advisable.
When people buy a $4,000 house,
they prefer q neighborhood of $4,000
houses Cor better) and if the property
does not satisfy those preferences, its
price will have to be lowered If 1t is
to be sold"
Decorative Repairs.
Pointing out that decorative repairs
often have greater influence on
buyers than structural ones, the Re-
view continued:
Structural repairs are a funda-
mental protection of the institutions
equity and the sale of dwellings certi-
ned as structurally sound helps to
create a reputation for fair dealing.
However, most structural repairs
do not show and, unfortunately, will
have little effect on the saleability Of
dwellings. Buyers are more infiu-
ehced by externals: New paint, styles,
fixtures. The provision of these things
is often necessary in making a dwell
ing attractive to the public"
In its reconditioning operations, the
H. o. L. C. has attempted to keep both
factors well to the fore of its plans
etr.,ct,,ro1 so,,pdnesS and n1easinr