by A.R. Cruz

Created on: November 08, 2011

What you need to know before you renovate your home

In today's buyers market the homeowner needs to know a few things before renovating their home.  Home values have been declining since 2008 as more inventory remains unsold.  Neighborhoods have been changing and declining as many vacant homes remain with bank's and mortgage lenders .  


Know the current value of your home

As a homeowner the current home market  has declined greatly due to bank foreclosures, short sales and home values declining.  Many homeowners find themselves underwater on their mortgages when they purchased their homes  originally at higher inflated prices.  The current homes market has caused the homeowners that bought and paid their mortgages on time, to find their current home values lowered because of the declining home market .
Before investing any more money into the property make sure that you are not underwater on your mortgage, meaning you owe more than what home is currently worth.

Will the renovation costs increase home value in current market.

If renovating the home to increase sale price of home, the homeowner should research home values around their neighborhood to estimate the sale price of their home.  If the renovation costs adds less than 30% of the total home sale price, examine if renovating is worth the money invested to fix the property in regards to the final home sale price. If the final sale price will increase by only 5,000 or less than it may not be feasible to spend on big renovation.  If a smaller cosmetic renovation is planned that costs a few hundred dollars than it may be a good investment to sell property.


What renovation will increase value of home

Kitchens and bathrooms are the two areas that need to be renovated if home is too be sold.  If the renovation costs will not increase home value than the homeowner should consider cosmetic changes to these areas.  If there are other specific areas in the home or landscape that need to be upgraded than these items should be addressed to make the home sale.  In current buyer's market the home being sold should stand out and be able to attract the most bids.

Is the renovation comparable to neighborhood homes

When renovating a home the homeowner has to ensure that they are not over improving their property for the neighborhood; depending upon the renovation, that should be considered.   If the homeowner wants to add a deck or a swimming pool and the homes in neighborhood are not middle class or high income area homes, than these improvements would not be comparable with homes in area.   The sale price of home would not reflect the improvements.


When  improving the property the homeowner should always consider and ask themselves these questions to make sure that renovating will increase home price.
Renovation should be considered if the homeowner will remain in household long term and is feasible as an investment overall.

Learn more about this author, A.R. Cruz.
Click here to send this author comments or questions.