If you make additions to your home, will you get your full return on investment when you sell? I was recently asked this question by homeowners Keith and Julie, who are considering adding a master bedroom and bathroom to their home before listing.
“Some home additions make sense in certain situations.”
This is a great question, but it’s also a difficult one to answer because each home is different. In general, though, making additions to your home won’t increase its value to the point where you’ll be able to recoup 100% of your investment.
There are many factors to consider before making an addition, the first of which is location: Will your additions make your home the largest one in your subdivision? Once you start breaking down walls, it’s possible to add too much square footage for your area. Also, will your additions disrupt the flow of your house? Most additions do, so again, adding square footage for the sake of adding square footage is rarely a good investment.
Home additions normally exceed the average square foot value of the neighborhood. If your addition will cost you $160 per square foot but the average square foot value of the neighborhood is only $125 per square foot, it’ll be hard to recoup your cost because you’re pushing up your house’s price. In the case of Keith and Julie, adding a master bedroom and bathroom will probably add anywhere from 700 to 1,000 square feet to their home. On top of that, they’ll have to add new heating and cooling fixtures for these rooms, which only adds to the cost.
Granted, some home additions make sense in certain situations. If you plan on staying in your home for over 10 years, your additions will probably get absorbed into the regular square footage. Additions are a long-term investment, not something you want to tackle if you plan on selling in two or three years. In any case, if your additions keep you in the neighborhood you love, that’s a great reason to make them.
As always, if you have questions about this or any real estate topic, don’t hesitate to give me a call. I’d love to speak with you.
