Is that home improvement really worth it or an overkill
Preparing to improve a home? Sadly, not every upgrade, change and improvement to a property pays off in the end. The value of your home is determined by a number of factors, with improvements being only one small piece of the puzzle. Fortunately, there are ways to avoid over-improving a home. Whether you’re thinking of making renovations to your house or purchasing a fixer-upper, here are 5 tips to prevent you from over-improving a home.
What’s an overkill when it comes to home improvement?
To over-improve a home means to put more money into a home than you can get out. For instance, a home may never be worth more than a certain amount of money – no matter how many nice finishes and upgrades are added to the home. The reason? The location of your home, square footage and nearby comparable sales all dictate how much a home is worth. While high-end finishes and upgrades can certainly improve a home’s value, they can only improve it so much. If the home is located in a not-so-great part of town, and has undergone a no-expense-spared renovation, the home may have been improved to the point where the owner won’t be able to fully recuperate the cost.
How can I avoid over-improving a home?
Consider how long you plan to stay in the home
First and foremost, how long do you plan to live in the home? If you only plan to stay a few years before putting your home on the market, then we definitely don’t recommend over-improving the home. On the other hand, if you plan to stay in a home for a long time – possibly forever – then improve away. After all, you’ll be improving the home for you not for potential buyers. If you’re planning to list the home in just a few short years, then there’s no point in throwing money away on unnecessary improvements that you a) won’t be to enjoy yourself and b) won’t be able to recuperate financially.
Take a good look at “comps” in your neighborhood
A “comp,” otherwise known as a comparable sale, is a key tool used in real estate to help determine a home’s value and list price. A comp is typically a home that is comparable to yours in size, condition and location. Comps give both buyers and sellers a good idea of the market value of a home as well as the market outlook for their specific neighborhood. Realtors and appraisers analyze comps to determine how much a home is worth. When improving upon a home, you’ll want to take a look at nearby comps to see how much a home like yours is really worth – in other words: how much a buyer is actually willing to pay for a similar home in your area. Make sure to also look for comps that have similar square footage and similar upgrades/improvements to the ones you wish to make to your home. If planned improvements aren’t capable of raising your home’s value, then we don’t recommend carrying them out.
Choose finishes that are less expensive
Not every upgrade and improvement needs to be customized and high-end. To keep costs down, we recommend using more universally-liked, less expensive finishes and materials. Choose materials that remain on-trend while also being more affordable than custom options. If you plan to sell the home in the next few years, it’s important that upgrades be relatively generic and neutral, so that they appeal to a wide array of buyers. Remember: not everyone is going to like your taste in wallpaper – even if the paper is top-of-the-line and expensive.
Focus on improvements that will increase the home’s value
Before you get carried away with upgrades and improvements, focus on features that are sure to get you the most bang for your buck. Examples of home improvements that usually pay off in the end include landscaping improvements, replacing old windows with energy-efficient ones, adding an outdoor deck or sitting area, a master bathroom update and kitchen remodel. All of these updates will likely add value to your home and make it a more enjoyable place to live as well. For a look at other home improvements that give you the best return on your investment, check here.
Don’t buy a home that is overpriced
If you overpay for a home in the first place, you’re less likely to get your money back on any improvements made. So when purchasing a home, make sure you are paying at or under what the home is worth. To avoid overpaying for a home, we highly recommend using a seasoned and trustworthy Realtor to guide you through the process.
*What if I already over-improved the home? *
Plan to stay in the home for a long period of time? Then the cost of over-improving your home may not bother you. After all, if you’re able to enjoy the upgrades and improve your quality of life, then over-improving the home may be worth your money. However, if you plan to sell the home in a few short years, over-improving your home can come at a cost.