Brought to you by Scott P. Rogers, Funkhouser Real Estate Group, 540-578-0102, scott@HarrisonburgHousingToday.com
Brought to you by Scott P. Rogers, Funkhouser Real Estate Group, 540-578-0102, scott@HarrisonburgHousingToday.com
Wednesday, September 22, 2021
As I pointed out yesterday...
But... that's not to say that you shouldn't consider remodeling your home... and it certainly doesn't mean that you should just trade up to a nicer home rather than making those improvements to your current home.
Let's explore the numbers a bit using one of yesterday's example as a starting point...
If you spend $100K on a home improvement project, you are likely to only see a $50K to $75K increase in your home's value.
Dialing in a bit, let's imagine this is your scenario...
- Current Home Value = $400,000
- Cost of Contemplated Renovations = $100,000
- Increase In Home Value Based On Renovations = $60,000
- Post Renovation Home Value = $460,000
- Improvement Cost Not Recouped = $40,000
So, given that of your $100K spend, you would not be recouping $40K of the money -- should you just trade up to a nicer home instead?
Not so fast...
Your costs of trading up to a new home might actually be more expensive than the money you "lost" in doing the renovations. Here are some approximate numbers, imagining an upgrade from a $400K home to a $460K home.
- Preparing the house to sell = $1,000
- Transactional cost of selling the current $400K house = $21,000
- Transactional cost of buying a new $460K house = $14,000
- Moving costs = $3,000
- Costs of any changes or improvements to new house = $5,000
So, there with some very rough estimates, you can see that we made it up to a $44,000 cost to trade up from your current $400K home to a new $460K home.
So, before you get overly depressed about spending more on your home renovation than you might see in an increased home value -- just keep in mind that it might be a very reasonable path forward as compared to selling your current house and buying a new one.
