How much should you spend on Home Renovation?
How Much is Too Much to Spend on a Home Renovation?
When a home buyer is looking at properties, a large consideration often is the expected cost of improvements. Unless a buyer is purchasing a brand new or custom home, it’s likely that they will want to make some changes, whether it be simply fresh paint or a full kitchen demo. It’s a big investment, and the buyer wants home renovation improvements to be reflected in the home value.
But how much renovation is too much?
Generally, renovation experts recommend that the maximum cost of a renovation of any particular room be the value of that room as a percentage of the overall house value. For example, in our area of Allen, TX, the median price of a home is about $289,000. If a buyer is looking at doing a full kitchen renovation, where the value of the room is 10-15 percent of the home’s value, a reasonable investment on a kitchen renovation would be $28,900 – $43,350.
However, there are other considerations to look at before investing in home improvements. For example, is it likely that the buyer will move and sell the home within the next few years? If so, she may want to hold on the master suite expansion, as the investment may not pay off in the short term.
Also, consider the specific renovation choices. Does the buyer want to build a resort-style pool in a neighborhood where none of the comparable area properties have pools? Or, perhaps she wants to change the home’s exterior to French Country style in a neighborhood where the homes have mostly traditional, Texas-style brick? These could prove to be risky choices, as potential future buyers could look at them as not fitting with the area’s property style.
Buyers can make smart renovation choices that fit their style, budget and long term investment goals – it just takes some time and research to make sure the changes are smart ones.
Where’s a great place to start with your research? The Thornhill Realty Team is here to help, with data and information to help you!