How to NOT Over-Capitalize on Home Improvements

Planned renovation of a Open modern kitchen from loft with view on a lush garden

For most homeowners, home additions, extensions and renovations are all about making the home they love even more perfect. The cost of those home improvements is important, and some people have to be sure first that they can afford the changes they are planning on making, or they repay any extra finance they take on.


However, one other consideration is just a simple, but oftentimes overlooked, idea: will the cost of improving my home increase its resale value by more or less than its work’s cost? If the rise in the resale value proves to be ‘less’, then you have ‘overcapitalized’. In theory, you will lose money if you do sell your home immediately as compared to if you had not made any changes.


Nowadays, there are some properties that are both home and nest egg, so it only makes sense if you ensure that you do not fall into this trap of overcapitalization.


How long should it take before you sell?

The first question you should ask yourself, really, is this: “How long will I be living in this home?”


If you have the intention to stay for a long time, say more than 10 years, then the chances are that the increase in your property’s value will definitely be more than the cost of your renovation. It is also important that you do not forget that you have enjoyed the extra space, better layout, or nicer bathroom for all that time.


Explore Alternatives

Okay, so why does one decide to renovate? Let’s face it, there’s a main reason: because you love where you live. However, even if you consider moving because you want to expand, or you want to enjoy certain sought-after features, all the costs of selling your home and buying a new one have to be taken into account such as:

-Agent and marketing fees for selling your current home;

-Legal fees;

-Stamp-duty on your new home;

-Moving expenses;

-Building and pest-inspection fees.


There is also the possibility that you might have to rent to cover the period between the two exchange dates.


Know Your Area

When buying a new house, many people have researched the areas they are buying in prior to moving in order to understand property values, and to ensure that they are paying a fair price. We advise you to do the same thing when you are planning on making home improvements.


It is best that you find out the current range of values of homes in your area especially the ones that are similar both in the configuration before and after planning your changes.


Get a Valuation

If it has been some time since you last bought your home, its value will definitely have changed, and the only way of knowing the current value is by consulting a professional. Once you have consulted an expert, you combine whatever information you get with your understanding of the range in your area, this should inform you of the amount you would need to spend on your renovation.


For more information on home improvements, do not hesitate to consult the experts here at George Kent Home Improvements Ltd.!

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