Do Costs Always Equal Value?

Real Estate Appraiser with Reliable Appraisal
As the real estate market takes a course correction homeowners are realizing that their home improvement costs are not always reflected in  the value of their home..   Generally speaking,  remodeling a kitchen or bathroom may bring the greatest return on a homeowners investment.  However, some custom improvements can actually detract from the value. These are known as "over-improvements."

What advice can we share with our clients?
  • Understanding the profile of new buyers in the neighborhood
  • Understanding which improvements have the greatest influence on property value
  • Avoid over-improvement by sticking to what's standard in the neighborhood
  • Consult a real estate appraiser to predict the cost to value considerations

I am certain that you have had to deal with clients with unreasonable expectations when they understand that their improvement costs were not directly reflected in their listing and/or selling price..




Comments (5)

Tom Burris
NMLS# 335055 - Baton Rouge, LA
Texas/Louisiana Mortgage Pro - 13 YRS Experience

You know... a consultation with an appraiser would be well worth the money. And a needed service!!! Hint, Hint.

Do you offer this service? What are the costs....?

I could make you my guest writer of the month on my outside blog with good info like this!!

Nov 21, 2007 01:35 AM
Alix Pinzon
Open Mortgage, LLC NMLS # 2975 - Downey, CA

As you know, the spirit of Active Rain is to help each other.  The best way that I've found is by hitting each others' website, to improve internet search rankings.  I checked out your website, and I liked tudor looking home that you have on there.  I like your blogs too!  If you have a second, please reciprocate the favor by checking out my website at

Jan 07, 2008 04:55 PM
Benjamin Smith
Apex Appraisals & Consulting - Powder Springs, GA
Atlanta Area Appraiser
I see the mess this creates all the time. One of my favorite stories was a lady that spent $70,000 remodeling her kitchen. This was in an area of higher end homes to begin with and the house was only 5 years old. I told her that the kitchen was very nice but the cost would not translate to value. After reviewing other homes in the development, I figure the kitchen she ripped out probably costs around $40-50,000. It probably would have been very beneficial for her to call me first before going through with it.
Jan 13, 2008 02:29 AM
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

I think the worst I've seen is a home I'd sold 6 months earlier.  The market was beginning to trend down when the family bought it, and they got a great deal.  When I interviewed for the listing, SIX MONTHS LATER, the husband pointed out a POT RACK  in the kitchen and a single RECESSED LIGHT he'd put in the laundry room.  He expected to get $50,000 more than what he'd paid six months earlier in a down market.

It's all about emotions.  Untangle those webs and you'll really be getting somewhere. 

Jan 13, 2008 02:39 AM
Sara Goodwin
Ashcroft & Associates - Portland, OR
Portland, Oregon Appraiser

Hey Meg -

I like to point out this site to people that question cost verses value on home remodeling. I don't think it's 100% accurate and it seems like the material and labor costs are at top dollar, but at least a consumer can put their own labor/material cost in the grid and get an idea... .

Feb 08, 2008 09:01 AM