I recently wrote a post about how to use a house value report. In that post I briefly mentioned using one for determining the value of your home improvement projects. Since writing that article, I have received a lot of requests for more information about this. Understanding the true return on your home improvement investment is mostly science with a little art mixed in.
Before you start a project, there are 3 steps to determining the value of your home improvements.
Step One - Find a good Dallas area Realtor that really knows your area or hire a professional appraiser. An appraiser is expensive (around $300) but will be more accurate than a Realtor. Plus, many Realtors have never done a TRUE comparative market report, opting only to compare bedrooms, bathrooms and square footage so they do not understand the intricacies that go into this science called an “Appraisal”.- Step Two - Have your Realtor or appraiser prepare a comparative market analysis or full appraisal to determine the value of your home compared to other homes in your neighborhood. Once that first appraisal is completeld, have them provide a second house value report comparing your home with future home improvements to homes in your neighborhood with those same improvements.
- Step Three - Subtract the home value of the first report (your current value) from the value of the second report which will give you the actual resale value of those home improvements.
The ART comes in when determining the emotional value of said improvements. Will those improvements increase the emotional value which will encourage future buyers to choose your home over another in your neighborhood? This emotional value is very important and can be worth a lot of money, even if the improvement does not increase the home’s actual resale price.
A perfect example of this emotional value- I recently had a client that purchased a new Darling home in Stonebridge Ranch McKinney. They decided not to sell their Plano home until right before they were ready to move into their new McKinney home. When you move into a new home before your current home is sold, then every week your home is on the market costs money. Taxes, insurance, utilities can really add up when your home is on the market. On a $300K home, that could add up to around $1400 per month that you would lose while your home is on the market. In this scenario, there are REAL financial benefits to the improvements. Even though the improvements did not add a price increase, they were enough to make the home stand out above the competition making it sell within the first few weeks.
If you would like to know the value of your home and would like a free house value report, please do not hesitate to contact me by clicking here or calling us at 800.326.9011.
Tags: Home Improvement, Home Value, House Value, Remodeling
This entry was posted on Saturday, April 19th, 2008 at 8:18 pm and is filed under Home Seller, Money Matters, Real Estate, Remodeling, Tips for Sellers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.