Crofton home pricing - Cost vs. Value of Improvements

March 4th, 2008 Categories: Crofton Real Estate

Selling My Crofton Home – A series of articles for Crofton home sellers

Roof (new)

When you re-modeled your kitchen or bathroom, added that sun room, finished the basement, or converted your garage to a family room… I’ll bet you had a conversation with your spouse about how much the project would improve your property value.

The truth is your home improvements may not increase your property value as much as you hoped – and perhaps not as much as they cost you to make.

Check out the Cost vs. Value Report of Remodeling Magazine to see what you can expect to recoup from your home improvements. It was based on feedback from REALTORS® in 65 markets, including Baltimore and Washington, who were given construction specs and costs on 29 up-scale and mid-range projects; then they were asked to estimate the percentage returned at resale.

The results of this Cost vs. Value Analysis are quite an eye-opener for many home owners! While the data may vary from one area to another, the bottom line is clear: You can’t add the cost of your home improvements to the value of a similar home without those improvements. Doing so will likely make your home overpriced and difficult to sell.

Pricing a home in today’s market is very tricky, with or without major improvements. Knowledge and understanding of market trends is critical, in addition to information about current competition and recent home sales in the area. It’s not realistic to expect a “how-to” blog about pricing to substitute for 30+ years of experience and training. I still invest many hours in the research and analysis needed to estimate the likely selling price for any home.

One footnote: Don’t confuse routine maintenance – i.e. repair and replacement of your roof, appliances and landscaping, for example – with capitol improvements such as a room addition, new deck, or additional bathroom.

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