The practice of increasing home value through proper renovation techniques has never been more important than it is today. We constantly hear on the news about the bad economy and the poor real estate market. Homeowners planning to increase the value of their home through renovations should be reminded that the margin for error is small, and a small mistake could easily wipe out their profits or, worse, lead to a total loss.
The slow economy shouldn’t deter homeowners from remodeling their home to increase the value of their home. However, homeowners just need to follow smart renovation techniques and be careful not to over-renovate their home. Excessive renovation could be a total financial disaster. Prudent homeowners need to learn about value engineering with regards to home remodeling if they truly want to benefit from home renovation.
The methods and analyzes that allow you to determine which specific renovations allow you to benefit most from the renovation are called value engineering. In the following paragraphs, we’ll briefly outline the steps to take to maximize profits and increase home value.
- I) The first step is to contact your local real estate office or a qualified appraiser to obtain the current market value of your home, as well as the value of renovated homes that are similar to yours within your area. . The purpose of this research is to ensure there is room for profit. If you find that the value of nearby renovated homes is close to the price of your unrenovated home, then there is no point in renovating your home.
Be sure to compare your home only to homes that are similar to yours and within walking distance of your home. It makes no sense to compare your house that is on a 30 x 90 parcel of land with a house built on a 10-acre lot or a house that is located in different areas, since real estate prices vary from area to area. other.
- II) Contact your local real estate office or a qualified appraiser to find out which renovations in your area add value and which do not. Next, you should take a closer look at value-adding upgrades and ask your appraiser or real estate agent to determine how much value each of these upgrades brings to your home.
Comparable Market Analysis (CMA) is the method used by real estate sellers and appraisers to determine home value. Appraisers look at a large number of properties sold near your home and then adjust the price of your home based on the condition of various parts of your home, as well as any new additions or extensions you may have built to your home. As an example, the appraiser knows that an additional second bathroom in your area is highly desirable and the sales price of homes with a second bathroom shows an increase of $4,000 compared to those without the second bathroom. Likewise, the appraiser may note that a finished basement increases the value by $6,000 or a fireplace has no impact on the value, etc.
III) Now that you know the value of each renewal, you need to find out the cost to perform each of these renewals. This step is necessary to find out if you can make a profit from a particular renewal. To determine the cost of each renovation, you must obtain at least three price estimates from qualified contractors.
- IV) After completing step three, you are in a position to determine which particular renewal maximizes your earnings. You can achieve this by subtracting the added value each renewal brings as detailed in step three from the cost of that renewal determined in step four. This is especially helpful when you’re on a budget and need to know which renewal will give you the most benefit.
The extra comfort and space are usually added when one renovates their existing home without the additional cost associated with buying and selling the home. Renovating a home is not easy as considerable research needs to be done in terms of cost and materials that may be required. Failure to do so could increase the total cost of the renovation beyond customer expectations. For this reason, there are a couple of factors that should be considered before implementing the project. Renovations Nelson
Make a plan:
Before undertaking the project, the type of addition that is required should be considered. For example, do you need to rebuild the entire house or is it just an addition? Once you’ve determined why you need the addition, determine the scope or scale of the project.