Re: T/B wants a say in the rehab - Posted by JPiper
Posted by JPiper on December 14, 2000 at 15:15:05:
I had to chuckle when I read your post! My first thought was that had you gotten high enough option consideration they wouldn?t have any money left for better carpet!
First, let?s correct a misnomer. If I spend $2000 on carpet the value of the house doesn?t go up $2000. If instead if I spend $1000 on carpet, the value of the house doesn?t decline $1000 either. Most repairs done to a house don?t affect the value dollar for dollar. So why would you credit something against the house?
Next, I wouldn?t leave the carpet and tile for them to do. They may not do it at all, in which case you?ve gotten yourself off into a quagmire.
The way I would handle it is that if they want an upgraded carpet, I would simply have them give you a check for the difference, and then install it yourself. The price of the house would remain the same. Remember, the value of the house is based on comps, not based on the type of carpeting. I would not give a credit of any type for this?.since this may later lead to expectations on the tenant/buyers part.
If they want to upgrade certain things in the house, that?s great, they do it at their cost (for the upgrade) and it will be easy to do right now. I certainly wouldn?t spend extra cash and tack it on to the price of the house. How do you know they will exercise? If they don?t, you now have spent more on the house that you might not have spent on a different tenant.