How to Avoid Property Overimprovement
When you’re getting ready to sell your home, you want to do everything you can to make your house easy to sell and to help get the best price for your home. Unfortunately, it’s an all too familiar story when homeowners overspend or invest in improvements that don’t pay off in terms of their home’s value.
At Bill Buys Houses, we buy houses when homeowners need to make a sale fast. In this post, we’re sharing advice to help you avoid overspending on renovations.
When homeowners overimprove their homes, this simply means they spend more money on improvements than they can expect to make back on a sale. Unfortunately, it’s an all too common problem. Maybe they’ve spent more than expected on improvements and the housing market starts to lag. Or perhaps those improvements are far above and beyond what they could ever get in return based on housing prices in the area.
All of these factors can impact your return on a home sale:
● Square footage
● Local market
● Interest rates
● Current economic indicators
● Curb appeal
Although it might seem like your home can never be too nice, it’s important to think about any additions or improvements you plan to make before investing a good deal of money. If a home improvement or renovation will benefit you while you live in the home, that’s one thing. But if you’re planning improvements solely to increase your likelihood of a fast sale or ROI, it’s better to err on the conservative side.
To avoid overimproving your home consider the following:
1. Consider holding off altogether.
If you’re not sure how long you’ll stay in your home and thinking of making improvements for personal reasons, it might be better to hold off and then sell your house as is. Although it can be exciting to customize your home interior to your family’s taste, personalizing a home can make it hard to sell. If you do plan to make improvements for strictly personal reasons, set your expectations on getting your investment back low.
2. Don’t put too much Into one room.
This is one of the biggest reasons homeowners end up with an incomplete home renovation. They start off with big plans, but then they end up overimproving one room or area of the home. Likewise, they may end up overspending on one area of their renovation and not have enough of a budget left for the rest of the home improvements they had planned.
It’s important to realize that a renovation can end up costing you more in the actual implementation phase than initially planned. Budget for each project with an awareness that costs can add up in ways you didn’t expect once you get started. Additionally, it doesn’t make sense to overspend on upgrades to a kitchen or bathroom when the rest of your home is outdated or in need of renovations.
3. Don’t go all in on high-end renovations.
One of the biggest mistakes homeowners make when they’re improving their homes to sell is to throw in everything including the kitchen sink on high-end renovations. One or two pricey improvements can help with your overall value if they’re targeted and carefully researched.
High-end improvements like hardwood and granite can end up costing more than any return on investment you can expect. Ultimately, there is always going to be a ceiling on how much you can ask in any given neighborhood no matter how much you’ve spent on renovations.
4. Consider Bedroom Number and Square Footage
Two of the biggest factors in helping with a home’s sale are square footage and number of bedrooms. Even if you’re selling a beautifully renovated home, it’s more likely to sell for a better asking price if it has enough room for potential buyers.
Although demographically speaking, Americans tend to have smaller family sizes than they used to, homes with three or four bedrooms tend to be the best sellers in most areas. Even if buyers don’t need the room for children, many will want space for a home office or hobby room. At the same time, you don’t need to overdo it. Adding a fifth or sixth bedroom onto a home is usually not going to help with your overall asking price.
5. Think about how upgrades will affect the asking price.
One thing that can turn off potential buyers is an outsized asking price in comparison with the rest of the neighborhood or area. Even if your house is worth every penny of that asking price, convincing potential buyers to check it out can be difficult.
Before landing on renovations to take on, do your research. How much are homes with similar square footage selling for in the same area? How long have some of the higher priced homes been on the market? Determine which upgrades will help you reach the higher end of that market without losing out on your renovation investment.
We Buy Houses in Minnesota
If you’re having trouble selling your home after overspending on renovations and you’ve been watching your home sit on the market for far too long, you need to sell your house fast. At Bill Buys Houses in Minnesota, we buy houses so you can move on with your life. To learn more about how we buy houses, call us at 651-270-9191 or contact us to get your offer right away!