The 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.
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.
For renovation work
in Selangor, Feel free to contact 012-2988560.
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