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Are You Over-Renovating Your Home?
Be careful about putting too much into your home’s renovations because you might not be able to make it back later!
There are many reasons for which you may want to remodel or renovate your home. For example, you may be refreshing an older house with a more modern look or simply making a new residence feel like home by incorporating your specific tastes. Other homeowners choose to renovate their homes as a way to increase their home’s value. But if this is your goal, be wary of over-renovating your home. When it’s eventually time to sell, there’s no guarantee you’ll get the purchase price you were hoping for and might not earn enough profits to cover the funds you invested in your home’s improvement.
A common mistake that homeowners make when it’s time for renovations is that they over-renovate their homes for the neighborhood or area. Turning your home into the nicest in the neighborhood might allow you to live luxuriously, but you may be unlikely to recoup your return on investment when it’s time to sell your home if your house’s renovations have outpaced other homes in the area. Since your house will likely be priced higher than other listings in the area to account for all the renovations you’ve done, potential buyers may be more inclined to pursue cheaper opportunities in the same neighborhood. Similarly, if you don’t live in a neighborhood that’s known for being fancy or luxurious, the people with the biggest budgets who could afford your asking price may not even be looking in your area.
The best way to avoid over-renovating is to remodel at the speed of your neighborhood. Keep tabs on remodels or renovations that your neighbors are doing, and make a mental note of amenities that seem to be popping up frequently. You may also want to tour local listings in your area to see how the renovations you have in mind for your house compares to homes that are for sale in your neighborhood. Last but not least, you can also consult with a knowledgeable real estate agent in your area who can provide input into what types of remodels they have seen and how housing prices are trending in your neighborhood.
As you may have also noticed, we bring up the idea of staying current with your specific neighborhood. This is important, as location is one of the most crucial factors in real estate. If you are someone who is eager to renovate, you may be most likely to find your next residence in an up-and-coming neighborhood where there will be lots of room for improvement. While there is no guarantee a neighborhood will become the next hot spot, there are some signs you can look for to identify neighborhoods that could be growing in popularity, and therefore garner more profits when it’s time to re-sell your home in the future. For example, pay attention to new developments that are being built near your prospective neighborhood and will make the location more desirable. Are new business centers or shopping centers being built? Are tech companies or other employers planning to relocate to your area? In addition, do your research on local entertainment, school districts, and proximity to traditionally popular locations. If the homes in the neighborhood are all newly constructed, you may also want to research the reputations of the builders and look into pricing trends in neighborhoods that have homes built by the same construction company. For more information on what to consider when choosing your next home’s location, click here!
At the end of the day, you ultimately have to be happy living in your home. If your renovations are important for your quality of life, they may still be worth doing even if there are outlying questions regarding how it will impact your home’s value and your profits if you decide to sell. But since over-renovating is a common mistake homeowners make, it’s important for you to be aware of it so you can make educated decisions about future remodels you do in your home.
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