overimprovment?

formerlyGDaisy09 · August 2014

Reading through another discussion on the board, how do you determine if the improvements you're making to a home are overimproving it?

H and I have been in our "starter home" for 2.5 years. we've made some improvements (new roof, garden beds, patio, and minor upgrades to fixtures) and we're considering renovating the basement to add another bedroom and a "bonus room"...I'm a crafter and H is a little tired of my sewing machine being a permanent fixture in the living room.

right now the house is a 2BR 2Bath 1-story ranch on almost no land (0.13 acres), it is not the highest valued property in the neighborhood, but it's definitely on the higher end, especially for the size of the lot it's built on. We're planning the renovation because we're planning to start TTC in the next year or so and we want space for my parents to be able to come visit once the 2nd bedroom is turned into a nursury. I love our house and have kept tabs on realestate in the area just out of interest and nothing that would be in our current price-range would be enough of an improvement to be our forever home, and most of the homes I like our current kitchen and location better.

So without renovating I see us being in the market for a slightly larger home in the next 2-3 years, with the renovation I could see us being happy where we are for another 7-8 years.

in addition to the basement we do have plans to wrap our back deck around the side of the house to connect it with the patio and to steal a small amount of space from the will-be nursury to add a alk-in pantry to the kitchen. are we getting carried away?

formerlyGDaisy09 · August 2014

Yes our neighbors on either side of us have 3 bedrooms. a quick zillow search shows 3/2 houses in our neighborhood have sold for $230K-260K (we paid 205 for ours 2.5 years ago). homes in our neighborhood are mixed, about half were built 100+ years ago, the other half went up in the 70s-90s....ours was build in '88, a lot of the more recently sold ones were built in the '70's. the neighborhood's average age has droped significanly since we moved in...so I think that's a good thing too.

this would be a legal bedroom, our basement is half-exposed and the room will be going in a space with a full-sized window, we plan to frame-out a closet.

we're thinking of doing basement renovation in about 6 months...and simultaneously conquoring the pantry...really it's framing out a couple walls and installing a doorway...not expensive or time consuming, it would steal about 20 sqft from the 2nd bedroom (which is plenty big to be a guest room, nursery, or kid's room), the contractor we're using for the basement said it would take half a day to get it framed and sheetrock hung...a week to get it done with lots of waiting time for mud and paint to dry.

the deck would be a next summer or the following summer project, so there would be a little time to live with the basement project before we conquor that project.

OtterJ · August 2014

Renovations like roofs, foundation, plumbing, etc. are just considered required maintenance, and don't typically add much value to a house.

Landscaping doesn't add value either - you hardly ever recoup that cost when you sell. I'm not positive, but you probably won't recoup much of the cost of extending the pantry, because the choice to sacrifice bedroom space to gain pantry space is something that future buyers might not like. Those types of renovations, you do because you like them, not because you're trying to add value to your house (and that's fine! If you want it, go for it!).

When you do renovations or upgrades that do increase the value of your house (adding a deck, or renovating your basement), you don't often increase the value of your house enough to cover the total cost spent on the renovations (you can research cost vs. value for various renovations online). That's not unusual, and that's why you should really focus on renovations that you want, and will live with for many years. The problem with improving your home comes when you do it to such a large extent that your home's appraised value soars beyond the others in your area. The market value (the price it will actually sell for) of a home is largely determined by the value of the homes around it. So if you're the only one in your neighborhood upgrading your home to a very large extent (I wouldn't consider your proposed improvements very large), you're going to increase your home's market value by less than if you were in a neighborhood where all other houses were on par with yours.

I think your improvements sound fine, especially since other houses in your neighborhood have 3 bedrooms, and are selling for more. I'd say go for it, but if you ask a local realtor, they can probably give you some good insight about how much improving is too much for your area.

formerlyGDaisy09 · August 2014

Thanks guys, in our area a newer or metal roof is a huge bonus when it comes to selling a home, it may not get us more money, but it may keep our home from being on the market for a long time, causing us to have to lower our price.

the pantry shouldn't cost much money, at all, lumber and sheet rock are cheap and the contractor we're working with has really reasonable rates, I'm pretty sure it's a less than $500 project. dry-good storage is a problem in our kitchen, so I see this adding some extra appeal to the house when we do sell. the second bedroom is fairly large, so stealing the space from there isn't a huge deal.

our budget for the basement is $7000, the contractor says they won't have a hard time staying under that, so I think we should re-coup that money in the price difference between 2BRs and 3BRs in our area.

overimprovment?

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