When you’re thinking about doing home improvement projects, it’s important to determine value, within the ideas of cost and benefit. Improvement means different things to different people at different times. Development doesn’t always mean that the dollar value goes up, or specific types of benefits increase.
Consider evaluating your home’s market price, comparing your home in the context of your neighborhood, thinking about the psychological value of improvements to your family, and allowing for emergencies and disasters as a budgetary consideration.
Evaluating Your Home’s Market Price
If you’re planning home improvements, first you should evaluate the value of your home by finding out how much money you would get in the current market if you sold your home as is. In other words, before you start improving specific parts, you need to know what your base value is, and then you can compare to the amount that your home would sell after the improvement has occurred. This is a big part of the cost and benefit equation, and trying to justify home improvement projects financially without that holistic viewpoint is going to take you to an illogical place.
Comparing Your Home In the Context of Your Neighborhood
How much money are your neighbors’ homes worth? What sort of layout do they have as far as the number of bedrooms, amount of space for the yard, and general quality of building? If you’re updating your home and creating improvement projects to match the quality of the houses near you, that will have a specific cost, and it will have a particular benefit. If your neighbor with a much more beautiful house is planning on selling his home for the same amount yours is listed, there is going to be a problem. If you improve your home to get it up to neighborhood standards, then the logistics and optics will be on your side.
Psychological Value To Your Family
Then there is the idea of subjective value. It might be the putting in a backyard pool costs $10,000, but only increases the value of your household as a whole by $2000. However, if your family likes swimming, that’s when you have to think about the cost regarding function and use, rather than just hard numbers.
Allowing for Emergencies and Disasters
If you’re saving up for a home improvement project that’s money intensive, before you do the construction, think about emergencies and disasters. If you save your money for five years to build a better gazebo, and then there is an earthquake, tornado, mudslide, or other natural disaster, all that money will get wiped out immediately when the structure collapses. Make sure that you allow for accidents and destruction so that you don’t end up creating a mismatch in time, energy, and value.
