The #1 Remodeling Mistake People Make Before Selling a Home
If you’ve been dreaming of that luxury master suite, complete with a dressing room, reading nook, jetted tub, waterfall shower heads, and a vanity big enough that two people can brush their teeth without bumping elbows, we’re all for seeing your dreams come true.
But if you’re justifying it by thinking that you’ll get your money back when you sell your home in a few years you might need to do some research.
The same goes for that sun room, or the garage with room for a shop, or the pretty pavers you had picked out for your new driveway.
All of those investments can increase the value of your home, but if they make your home one of the most expensive in your neighborhood your sales price may suffer.
In the world of real estate appraisal, they call it “over improving.” It’s even worse if your improvements make your home the most expensive in the neighborhood by a large margin. And we’re not talking about the appraised value of other homes on the market, from an appraisal standpoint it doesn’t matter if the other homes are for sale or not.
Basically there are two principles at work — what they call “regression;” which means that the smaller, older, or less improved homes will pull the value of a better home down when it is appraised, and “progression,” which is just the opposite; the higher valued homes pull the value of your home up. So to get the best value when you sell you want to ride on the coattails so to speak of the more expensive homes. If yours IS the most expensive home then your neighbors are riding on YOUR coattails.
So you don’t really want to keep up with the Joneses if you’re expecting to sell your home and want to get top value for it. In fact, you want the Joneses to go ahead and do those major remodels while you spiff up your home just enough to attract the highest price buyer so you can move to a neighborhood where the home values justify your dream master suite. (When you’re ready to do that we hope you’ll reach out to one of our licensed loan offers so we can guide you through the process of getting the best deal on your financing. We can even take you from application to close in eight days!)
Of course if you aren’t concerned about recouping your investment soon, and you’re just doing that remodel for the enjoyment you’ll get out of your new space, then don’t let anyone stop you. (We’re here to help with equity loans too, so you can have the cash for the master suite AND the sun room and pavers!)
Photo: Getty Images