As a Portland, OR real estate appraiser, people often ask, “How can I add value to my home?” This is a difficult question to answer in general terms because it depends on the type of property and local market conditions. However, the question can be answered as it relates to a particular property.
If your property were a tiny one bedroom and one bath home in the lowest priced part of Portland, it probably would not be a wise investment to add high quality finishes like stone counters, stone flooring, and exotic hardwood. This sounds crazy but it happens often, and I’ve even heard of people obtaining professional real estate advice to do so.
There is a real estate principle called Conformity. The principle suggests that value is maximized when properties blend well with other properties in the area. Conformity and value maximization are the fundamental reasons for most zoning and deed restrictions. From the Principle of Conformity, we can reason that our one bedroom and one bath example in a low priced area probably would not benefit as much from designer finishes unless most of the properties around it also have similar quality finishes, or if there is a shift in market preferences.
This does not mean that designer finishes will not increase the value of the example property. Conformity just means that the improvements will probably cost more than the resulting added appraisal value. In other words, flashy improvements in the example would have a low return on investment (ROI). If the owner of the example never plans to sell or refinance, then there is no problem with ROI. However, most of us will eventually sell or refinance.
So you ask, “What kind of improvements should I make to maximize my home value?” I would start by looking at the homes immediately around your home and in your property’s competitive market area. If most area properties have been updated recently and your home is dated, you should consider updating. Just be careful not to try to outdo your neighbors, unless market trends suggest an increasing demand for higher end improvements in your market area. A local market expert, like an appraiser, may be needed to help determine what improvements have the best cost benefit for your home. Call us for a free consultation on Portland, OR area home value maximization. Also, check back next week, as I will provide a list of easy ideas that can provide a strong ROI for most properties.
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