Know the Real Consequences of Delaying Completion of Your Dream Home
During my 30-plus years as a real estate assessor I have often heard home owners comment that they have not finished their home construction or remodeling project because they wouldn't get a full assessment if they left it unfinished. While this is true to a small degree, it may not be worth living with a partially completed home. Here's why.
Most city and county assessors give more weight to the sales comparison approach to value than the cost approach. Using a sales comparison approach, comparable sales are used to estimate the value of your home and an adjustment is made to estimate the "cost to cure" the unfinished portion of the home. I had one home owner who said he left the wood trim off his living room and kitchen for at least the last 10 years because he was sure the assessment was lower because it was unfinished. The estimated cost to cure this condition was about $2,000 and the tax saving was about $20 per year, hardly worth the unsightly look of an unfinished project. The cost approach to value considers current construction and labor costs and depreciation to estimate value. The cost approach would also take into consideration the cost to cure any unfinished items.
Keep in mind too that the unfinished condition can also impede your ability to refinance or sell your property. Refinancing or selling your home are difficult enough, you don't want to add the anxiety of having to complete your unfinished project to the list of things to do.
If you still think leaving the project unfinished is a good ideal, ask your local assessor how they assess unfinished construction. It's the only way to be fully informed of the consequences of not completing your project. Like many urban myths, this assessment myth is spread by uniformed people.
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