he 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 poor economy and poor real estate market. Homeowners who plan to increase their home value through renovations should be reminded that the margin for error is slim and a small mistake could easily wipe off their profit or worse result in a total loss.
Slow economy should not scare away homeowners from remodeling their home in order to increase their home value. However, homeowners should only follow smart renovation techniques and be careful not to over-renovate their home. Over-renovation could be a total financial disaster. Prudent homeowners must learn about value engineering in respect to home remodeling if they are serious about profiting from renovation.
The methods and analysis that enable you to determine what specific renovations allow you to benefit most from renovation is referred to as value engineering. In the next paragraphs we are going to briefly point out the steps one needs to follow in order to maximize one’s profit and increase his/her home value Builders Richmond.
- I) Step one 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 that there is room to profit. If you find that the value of renovated homes nearby is close to the price of your un-renovated home, then there is no point in renovating your home.
Make sure that you only compare your home with homes that are similar to yours and are located a short distance from your home. There is no point comparing your home that is on a 30 x 90 parcel of land to a home built on a 10 acre land or a home that is located in different areas as real estate prices vary from area to area.
- II) Contact your local real estate office or a qualified appraiser to find out which renovations in your area add value and which renovations do not. You then need to look further at the renovations that add value and ask your appraiser or your real estate agent to determine how much value each of these renovations bring to your home.
Comparable Market Analysis (CMA) is the method used by real estate salespersons and appraisers to determine home value. Appraisers look at large quantity of sold properties near your home and then adjust the price for your home based on the condition of various parts of your home as well as any new additions or extensions that you may have build to your home. As an example the appraiser knows that a second additional bathroom in your area is very desirable and the sold price of homes with a second bathroom show an increase of $4000 in comparison to those that did not have the second bathroom. In the same way the appraiser may note that a finished basement increase value by $6000 or fireplace has no impact on the value and etc.
III) Now that you know the value of each renovation, you need to find out your cost for carrying out each of these renovations. This step is needed to find out if you are able to make a profit from a particular renovation. To determine your cost for each renovation, you should obtain at least three price estimates from qualified contractors.
- IV) After completing step three you are in the position to determine which particular renovation maximizes your profit. You can accomplish this by subtracting the added value each renovation brings as detailed in step three from the cost of that renovation determined in step four. This is especially useful when you have a limited budget and need to know which renovation will give you the maximum profit.
Extra comfort and space are usually added when one renovates their existing home without the extra cost associated with buying and selling of the home. Renovating a home isn’t easy as such one needs to make considerable research in terms of cost and materials that may be required. Failure to do so might increase the overall cost of the renovation beyond the clients’ expectation. For this reason, there are a couple of factors that one should consider before implementing the project.
Make a Plan:
Before undertaking the project, one should take into consideration the type of addition that is required. For instance, do you need to rebuild the entire house or is just an addition. One you have determined why you need the addition, determine the scope or scale of the project. A detailed work plan ensures that contingency measures are put in place. Planning also ensures that one project has minimal setbacks and crisis; thus it ensures one has a hassle-free renovation. For instance, if the renovation involves plumbing, one should consider seeking advice from contractors on what is required.
Determine How to Finance the Project:
Unless one has savings, you need to determine how the project would be financed to prevent it from stalling mid-way due to lack of finances. For instance, renovating a floor isn’t cheap; hence, in consultation with interior designers, one might get an estimate of the cost of the renovation.
Once a plan and mode of financing have been determined, there is the need to hire professionals to assist in the renovating. Working with professional ensures that unnecessary wastage of materials are avoided and project time lines are met. There are some renovations that we can’t do thus there is need to hire specialists in areas we lack skills. Such duties ensure that one gets value for the money since the contractors have the necessary expertise to provide a good finish.
Before starting to build or renovate, one should find out the permits required to initiate renovations. Most local councils have requirements for a home owner to obtain permits before any construction or renovation can be done. Having a permit also ensures that the building or renovations are within the legal requirements.