Have you ever overdressed for an event? Perhaps you understood the dress to be more formal, but when you arrived in your dress or black suit, everyone else was wearing jeans and casual shirts. You may recall how everyone looked as you entered the room, dressed a bit out of place.
That happens to homeowners too, but it’s not called over-dressing – it’s called over-improving. It happens when property owners remodel a home to the point where its new value far exceeds all others in the neighborhood.
Let’s say that your family has grown, and you begin your improvements by adding two more bedrooms and another bath. You expand your garage, install a deck and maybe even put in a pool. In the process, you add over $55,000 in improvements to your $100,000 home.
As long as you continue living in the home, that’s not a problem. When it’s time to sell, however, you’ll face an unexpected challenge. You’ve spent over $55,000 on improvements, but buyers are unlikely to see the value as they compare the prices of other homes in the area, and expect yours to be in line with those. The improvements you’ve made fit your lifestyle. They may not fit the buyer’s lifestyle.
Before beginning a major project, determine the impact on your home’s value. Consider upgrading to a larger home instead of remodeling your current home. Call your trusted real estate agent, tell them your plans and ask what kind of monetary return you can expect to receive from your remodeling investment. Listen to their advice and then decide. When it’s time to sell, you’ll be glad you sought their advice.