If you’re like most homeowners you want to get the most bang for your buck in home improvements. Sometimes certain improvements to your home cost more than the value you get from them. This is one of the most frequent questions I get asked in my job as a real estate appraiser. My answer most of the time is “it depends”. I don’t mean to be so vague but there are a lot of factors that we have to look at when determining the “market value” of improvements. Some of these factors include your location: what types of improvements are typical in your neighborhood or market area; the cost to make these improvements: the lower the cost may result in a higher return on your investment; and also the quality of workmanship: it may be worth the extra money to have a licensed contractor do the work for you.
It wouldn’t be wise to make your home 5,000 square feet (s.f.) if the typical home is 2,500 s.f. or build a taj mahal pool and pool house if these are not common in the area. By looking around the area and knowing your neighborhood you can get a pretty good idea of what is typical. This is not to say you cannot make the improvements you want to but you may not be able to get the money back when you sell the home. Now some people will say that they are going to be in their home until they’re buried, and they want their home to be like they want it, which is fine but you should be aware that circumstances change.
A good way to see what typical improvements cost and their value is to check out a remodeling website like the one I
have linked here. It will give you the information you need before you begin a project and help you to be informed about what you can expect to get back. For major renovations you may want to get an appraisal to see the value impact of the improvements on your homes market value. Please call me if you have any questions at (205) 243-9304.
Ah, the question we all get! If only everyone could recover what they spent. Sometimes the buyers of an over improved property really hit the jackpot!
I hope the home owners in your area find your post and click through to the linked site.
Good, concise explanation!
Alison, that is true about buyers of overimproved properties. I am getting some appraisals where the homeowner invested money in improvements, but with declining property values their homes are appraising for less than what it was before the improvements! Talk about disappointed people. I cannot blame them though. They do have to keep the long term picture in mind though if they can (if they don’t have to move). Their values should go back up, however how long it will take is unsure.
Excellent information Tom. Love to read your blog, very informative.
Thanks alot Valerie. I hope the information on my blog can be helpful.