This is an important question for a homeowner that is contemplating moving or remodeling. The answer is a somewhat complicated one!
It starts with major home improvements; room additions, replacements of kitchens and bathrooms, etc… rarely pay off in the near term. It ends with small and relatively inexpensive changes play a huge role in making your home attractive to buyers if your decision is to move now. There are some minor home improvements in the kitchen will impress your potential buyers!
The most appropriate major home improvements are unlikely to return their full cost if a house is sold within 2-3 years.
Does that mean major home improvements are always a bad idea? Absolutely not! It does mean if your present home falls short of meeting your family’s needs, you need to think twice and carefully before deciding on a major renovation. Viewed strictly in investment terms, major home improvements rarely make as much sense as selling your present home and buying one that provides you with what you want.
Even if you have a strong attachment to the home you’re in. And feel certain that you could be happy in it for a long time if only it had more bedrooms and baths, there are a few basic rules to keep in mind.
The most basic rule of all in this regard, is the one that says you should never (unless you absolutely don’t care at all about eventual resale value) improve a house to the point where its desired sales price would be more than 20 percent higher than the most expensive of the other homes in the immediate neighborhood. There can be challenges if a home significantly does not “fit,” with the rest of the neighborhood.
Try to raise the value of your home too high, and the surrounding properties will pull it down. If it is significantly different from the rest of the neighborhood it won’t make sense for a buyer to bring their dollars to your home instead of somewhere else that is more appropriate.
Here are some other rules worth remembering…or better yet, writing down!
- Never rearrange the interior of your home in a way that reduces the number of bedrooms to less than three.
- Never add a third bathroom to a two-bath house unless you don’t care about recovering your investment.
- Pools rarely return what you spend to install them. The same goes for sunrooms and finished basements.
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