Many a homeowner spends thousands of dollars on a home remodel only to find out that in reality it has not changed the value to their house. Unless the remodeling project is designed to fix a structural problem or flaw it is often unlikely that the homeowner will make a profit aside from the pleasure in having the house enhanced to fit their liking.
1. Location
A common mistake among homeowners is to improve their house more than that of the neighborhood it is located in. While the more improved house might possibly receive more interest than others in the area marketed it is unlikely to command a premium well above the average selling price of homes in the neighborhood. A little known fact is that market price is held in check by the lowest-priced homes in your neighborhood and not the other way around.
2. Time
While you may not be planning on moving houses immediately after a home remodel, time does impact the ability of a remodel to increase a houses value. Structural or design improvements such as an addition or completed basement will add value for a longer period of time than updates to a kitchen or bathroom or even technological improvements such as a new furnace or air conditioning system.
3. Consider the cost – and the return of your investment
Did you know that there are several sources that can give you insight into the expected payback for home improvement projects? Realtor magazine publishes an annual “Cost vs. Value” report that compares the cost of common remodeling projects and shows the payback that homeowners can expect.