How much remodeling can your home afford?
Updated: Apr 18, 2019
Even if you're not planning to sell any time soon it is still important to have an idea of the value of your home and those around you.
The first thing homeowners do when beginning a remodel or renovation is to set a budget but too often the value of the home is not a consideration when setting that budget. It is not just about how much you can afford to spend, it is also about home much your home can afford to carry. You don't want to spend outside the scope of the home. If your home renovations exceed the market value of the area, then every dollar spent over that will not be recouped.
To make sure you are spending within the scope of your home, speak to a local Realtor and have them provide you with a market analysis of your home. A good realtor will sit down with you and discuss the current market and any trends in the area.
Next go to open houses in the neighborhood. Look at the homes that have been updated or remodeled. The goal is to find a remodeled house in a similar price range and observe what quality finishes and upgrades the homes that are selling have.
The information gathered from your Realtor and from visiting other similar homes in the area will help you determine the after repair value of your home. That is the value you do not want to exceed when determining what to spend on any improvements.
Things to keep in mind when starting any home improvement project:
Decide whether you’re remodeling for profit or for personal use.
Determine the maximum value of your home and do not exceed that in your cost.
Adding livable space is the most valuable type of remodel.
Great homes have wonderful outdoor space, don’t neglect landscaping.
Pay more for quality material since labor cost is relatively fixed.
Get the proper permits for the work to ensure a smooth resale when the time comes.
Expect the overall job to cost 30% more and take 30% longer.
Always speak to the most recent customers of any contractor you consider hiring.
The value of a remodel fades over a 10-20 year period.
If you are considering a home remodeling project give me a call. I am happy to assist home owners in understanding the current real estate market and how this information can guide them in their ownership decisions.
-Ciara Crews | Big Red Realty Group