Your Home Is Not Likely Worth The Purchase Price Plus The Cost Of Your Home Improvements


Your Home Is Not Likely Worth The Purchase Price Plus The Cost Of Your Home Improvements
By Scott Rogers • October 21, 2019
This math doesn't, generally, lead to an accurate understanding of market value -- but sometimes it is how homeowners start to think about market value... $250,000 - how much I paid for the house last year $10,000 - cost of my kitchen remodel $8,000 - cost of replacing my roof $4,000 - cost of replacing the carpet in all bedrooms $2,000 - painting all interior walls $3,000 - landscaping updates $2,000 - replacing some of the kitchen appliances -------------------------------------------------------------------------------- $279,000 - the new value of my home this year Is this home (as described above) now worth $279K? Maybe -- but if so, it is not likely a direct result of only the $29K of improvements -- but perhaps market improvements as well. Basically, the cost of most home improvements do not directly increase the value of your home by the amount you spent to make the improvement. If a home with an older kitchen is worth $250K -- and you spend $10K on a new kitchen -- your home might be worth $255K or $257K -- but not necessarily $260K. The same goes for almost all improvements you might make to your home - and in some ways, the less someone thinks about a home improvement on a daily basis, the less impact it is likely to have on value. If you owned a $250K house with an older but not leaky roof yesterday, and you spend $10K on a new roof today, your home is not likely to be worth $260K tomorrow. So, what then, does this mean for homeowners? Look first at comparable sales (with comparable amounts of home improvements) when thinking about the market value of your home before and after home improvements. If you are making elective (non-essential) home improvements make sure you are going to get day-to-day value out of them by enjoying that new kitchen, etc. Think twice before making a lot of expensive updates just before selling if you are unlikely to get all of that money back in an improved sales price. And here's a novel one - don't think about your home just as a financial asset - it is a place that provides you with shelter, where relationships are built and memories are made. :-) Thinking about making a home improvement but not sure if you should move forward with it based on how long long you might own the home? Feel free to touch base with me to discuss the decision. Receive Updates by Email Recent Articles: There Are Plenty Of Types Of Houses That Exist That Just Are Not Available To Purchase Home Sales By Price Range In The City Of Harrisonburg Are You Compromising On Aspects Of Your Next Home That You Can Or Cannot Change Later? How Much Slower Are The Winter Months In Our Local Housing Market? Rockingham County and New Home Sales Drive Surge in Area Housing Market Find The Balance Between Optimistic And Realistic Home Pricing Room Size Is Difficult To Understand Solely From Real Estate Photos How Much Would You Value Not Having To Prepare Your Home For Showings? One Out Of Four Homes Is Taking Longer Than A Month To Sell Consider The Cost Of Your Planned Renovations When Planning Your Offer
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Nov 21, 2024 (unless otherwise noted).
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