Removal of a closet - impact on value?

[Paul K Moy]

I have an unusual problem. I have 8 units on the same tier. They're all 2 bd/2bth units, with approximately 700-sf of GLA. The units consist of a living room, kitchen/dining area, a washer and dryer. Besides the bedrooms, the only other closet space is by the foyer, which roughly is 7-sf.

My first thought is, well, it could be a cost to cure item, however, the owners will lose approximately 1% of the unit, and presumably a proportion of ownership, which should impact their assessments.

I spoke with two realtors who've recently sold two units on the same tier, and naturally they couldn't quantify the impact on value. One suggested it's simply adding storage space like built-ins or other cabinetry or furniture options, basically no impact. Another said that he believes the impact would be a minimum of $5K.

I've searched online for articles, and they all suggest there is some impact, but haven't quantified it.

Naturally, finding comps for this problem is like looking the needle in a haystack.

Thoughts?

 

[Dublin ohio]

I have an unusual problem. I have 8 units on the same tier. They're all 2 bd/2bth units, with approximately 700-sf of GLA. The units consist of a living room, kitchen/dining area, a washer and dryer. Besides the bedrooms, the only other closet space is by the foyer, which roughly is 7-sf.

My first thought is, well, it could be a cost to cure item, however, the owners will lose approximately 1% of the unit, and presumably a proportion of ownership, which should impact their assessments.

I spoke with two realtors who've recently sold two units on the same tier, and naturally they couldn't quantify the impact on value. One suggested it's simply adding storage space like built-ins or other cabinetry or furniture options, basically no impact. Another said that he believes the impact would be a minimum of $5K.

I've searched online for articles, and they all suggest there is some impact, but haven't quantified it.

Naturally, finding comps for this problem is like looking the needle in a haystack.

Thoughts?

If the closet is within the walls of the unit. Why would they lose a proportion of ownership. Also what is the reason they are removing the closet?

 

[Paul K Moy]

The building is upgrading the electrical system to meet new city standards. This electrical box will take the space of that closet space, so the owners will lose 1% of their condominium space.

 

[Trihard]

Foyer closet removal wouldn't be much of an issue. Commandeering a closet in a bedroom for electrical panels sounds like a cheap way to get it done. I would 100% call that out. Like WTF, you go into a bedroom, you open the closet and theres an electrical panel there. Would you want your kids sleeping in there. Hell no. Functional obs all the way.

 

[Dublin ohio]

Foyer closet removal wouldn't be much of an issue. Commandeering a closet in a bedroom for electrical panels sounds like a cheap way to get it done. I would 100% call that out. Like WTF, you go into a bedroom, you open the closet and theres an electrical panel there. Would you want your kids sleeping in there. Hell no. Functional obs all the way.

I get your point. But the panel is going to be there, closet or no closet

 

[Trihard]

Why does the electrical need to be in the closet? Can't they run it into the laundry room? The owner is being cheap.

 

[Dublin ohio]

The building is upgrading the electrical system to meet new city standards. This electrical box will take the space of that closet space, so the owners will lose 1% of their condominium space.

Is it the panel just for the unit?

 

[Paul K Moy]

Foyer closet removal wouldn't be much of an issue. Commandeering a closet in a bedroom for electrical panels sounds like a cheap way to get it done. I would 100% call that out. Like WTF, you go into a bedroom, you open the closet and theres an electrical panel there. Would you want your kids sleeping in there. Hell no. Functional obs all the way.

It's not the "typical" electric panel. The units already have one. It's "a new electrical distribution system in which the equipment is larger than the existing ones, and that closet space is needed to safely supply electricity." That is the only detail the HOA has provided. Based on that description, it sounds like it will take up all 7-sf space (8" X 8'4").

Based on how the units are configured, that is the only area that could be used. There's a door in the hallway that leads to a room next to the unit where presumably the old distribution unit is located. It's going to "intrude" into the owners' space. It's like "eminent domain" where the HOA is seizing 1% of that space, which happens to be somewhat vital. I mean, whereas can you hang your winter articles? I mean, I can see installing hangers and a bench, and it doesn't seem to be a "big" deal, it seems to be.

It's like a room in condos that are used exclusively for building use only, in this instance, it presumably contains the old distribution system.

Hope that makes sense and clears things up a little. That's why I don't think it's simply a cost to cure item. Definitely obsolescence, but determining the impact of value, well that's a mystery.

 

[Trihard]

It's not the "typical" electric panel. The units already have one. It's "a new electrical distribution system in which the equipment is larger than the existing ones, and that closet space is needed to safely supply electricity." That is the only detail the HOA has provided. Based on that description, it sounds like it will take up all 7-sf space (8" X 8'4").

Based on how the units are configured, that is the only area that could be used. There's a door in the hallway that leads to a room next to the unit where presumably the old distribution unit is located.

It's like a room in condos that are used exclusively for building use only, in this instance, it presumably contains the old distribution system.

Hope that makes sense and clears things up a little. That's why I don't think it's simply a cost to cure item. Definitely obsolescence, but determining the impact of value, well that's a mystery.

If all the units in the building will have the same electrical in a bedroom closet, I don't think you need to do much in terms of adjustments, just make a comment about it. To make it USPAP compliant ,you can interview the HOA as your source, put their phone number in the report and who you interviewed. And basically say in the report that all the units will be short a closet according to Steve or Bob or whoever from the HOA.

 

[J Grant]

I have an unusual problem. I have 8 units on the same tier. They're all 2 bd/2bth units, with approximately 700-sf of GLA. The units consist of a living room, kitchen/dining area, a washer and dryer. Besides the bedrooms, the only other closet space is by the foyer, which roughly is 7-sf.

My first thought is, well, it could be a cost to cure item, however, the owners will lose approximately 1% of the unit, and presumably a proportion of ownership, which should impact their assessments.

I spoke with two realtors who've recently sold two units on the same tier, and naturally they couldn't quantify the impact on value. One suggested it's simply adding storage space like built-ins or other cabinetry or furniture options, basically no impact. Another said that he believes the impact would be a minimum of $5K.

I've searched online for articles, and they all suggest there is some impact, but haven't quantified it.

Naturally, finding comps for this problem is like looking the needle in a haystack.

Thoughts?

700 sf for two bed 2 baths is a tiny house living, even if it is in a "unit"- I assume by unit you mean an apartment?
Sf living space for a 2-bedroom is cramped and small - a buyer for that will accept the lack of a closet.

Your post is not clear - is your subject unit the only unit that has only one closet ? The other small units that sold had more closets?