Los Altos Real Estate Blog

Many people trying to get into Los Altos will look at homes that need some work.  A fixer-upper in Los Altos is a good investment and can be an inexpensive way to get into either the Los Altos school district or the Cupertino school district.  This article will talk about how to decide what to offer on a Los Altos fixer-upper so you don't overpay.

For this article, I'm going to use the listing at 1115 Saint Joseph Avenue in South Los Altos.  This is in the Highlands neighborhood of South Los Altos and has been a very active area in recent months.  This is a nice home in original condition (per the MLS) located on a well-traveled street.  It's a 3 bedroom, 2 bathroom home with a bit over 1300 sq.ft. on a nearly 11,000 sq.ft. lot.  It's currently priced at $1,125,000. The nearest, recent comparable home was on Stonehaven which sold for $1,625,000.  That home was similar in all respects except that is was a bit over 2300 sq.ft.  There is also a $500,000 price difference which is important for this discussion.

The most important adjustment is for quality.  The home on Stonehaven was not only larger but had an updated kitchen and bathrooms.  Major improvements needed include a new kitchen, new bathrooms, new walls (remove wood paneling), new floors (need hardwood), and paint.  Other lesser improvements include lighting, plumbing, doors, molding, and other features.  The total cost to make all these improvements should run about $100,000-$125,000.  Now, adding up the current asking price and the price of the improvements the total is $1,250,000 - a real bargain for any nice home in South Los Altos.

The next adjustment is for size.  To get the home on Saint Joseph up to the same size as the one on Stonebrook will require adding 1000 square feet.  The cost to build an addition, depending on whether or not is includes substantial plumbing or electrical work, should run about $250 per square foot.  Adding in the cost of architects fees, permits, and construction financing costs will run another $15,000-$25,000.  The cost of the addition is the $250,000-275,000.  Add that onto the adjusted cost of the improved home and the total comes to $1,500,000 and change.  Based on that, the home at 1115 Saint Joseph appears to be an excellent deal compared to other recent sales in South Los Altos.

The improvements don't have to be made unless the buyer wants to but the idea is to work out the costs to adjust one home for another.  With a little analysis, you can quickly determine if a fixer-upper home anywhere in Los Altos is a good deal.  Keep in mind that construction costs can vary from hilly areas in South Los Altos to flat areas in Central Los Altos due to increased foundation work and grading of the land.  A general contractor can give you a more accurate estimate to help make your decision.