Watch
Out for "Over-Improving"
Before you start tackling that high-yield improvement, know
that there's a chance you could "over-improve" your
home. That might sound crazy, but it happens most often when
the project just doesn't fit the neighborhood or the home's
value. For example, if you own a $125,000 home in a neighborhood
full of three-bedroom, two-bath homes, and you decide to add
on another garage or another floor, you might never recoup the
cost of that work.
Why? If the project costs you from $25,000 on up, then you'd
have to sell your home for at least $150,000 or more just
to break even. Are like homes in your neighborhood selling
for that? If not, you're out of luck, because your expensively
remodeled home might not fit in with the value of other homes
in the surrounding area. Thus it may not be as valuable to
potential buyers, since house prices are often ruled by location,
and who's to say they might not inherit your quandary when
it's time for them to sell?
Drop That Toolbox
You might be willing and able to do just about any home improvement
project around your house, but before you tackle any major
work, consider two things. First, ask yourself if you can
do the job right. Saving money is one thing, but are you knowledgeable
enough about the task at hand so you don't encounter major
(and costly) problems?
Second—and perhaps more importantly—put yourself
in the shoes of a potential buyer, even if you're not likely
to sell for years. You might be proud of all your home improvements,
but the homebuyer may ask lots of questions about the work.
Like it or not, there is an inherent skepticism about homegrown
handymen, no matter your talents. Professionally done work,
on the other hand, tends to have a certain "seal of approval"
that assures the job was done properly. Plus, most pros guarantee
their work for an extended time, which gives buyers even more
confidence.
Location, Location, Location
When looking at the numbers, you might find that they seem
either too high or low for your given area. Remodeling Online
attributes that to the leveling effect of averaging. "High
demand for remodeling services in some parts of a given metro
area may drive prices up, but this is often countered by lower
demand—and lower prices—in another part of the
same city," the report says.
Quality and differences in size and scope also account for
differences in a project's cost. This is why, especially if
you know you'll be selling your home within a year or two,
it pays to consult a REALTOR® before you pick up a hammer.
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