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how to know if you're overbuilding

5 questions to ask yourself to be sure you’re NOT overbuilding

June 19, 2013 By Ryan Lundquist 1 Comment

How would you know if you are overbuilding or not? Here are five questions to ask and then five golden rules of real estate to keep in mind. What do you think?

Five Questions to Ask to Make Sure You’re NOT Overbuilding

1) Will buyers pay for this feature in the resale market?
overbuilding - by Sacramento Appraisal Blog2) Is what you’re doing consistent with the neighborhood or will your property stand out too much in a bad way?
3) How much value will you recover in the resale market from the cost of your project? Is it worth it to you from an economic standpoint?
4) Will people think, “wow, I would NOT want to live next door to THAT house”?
5) What do buyers really expect in your neighborhood for both size and upgrades?

Five Golden Real Estate Rules to Remember

1) Be in Touch: What are buyers really looking for in your neighborhood? There is a place for making your home comfortable and doing some things that are just for you, but try to stay in tune with the expectations of buyers also. Do buyers really want that Olympic-sized swimming pool or an underground Bat Cave guest house? (well, I would want that).
2) Principle of Conformity: There is something about blending in with the neighborhood that is desirable for buyers. Generally speaking, be a nonconformist in life, but a conformist in real estate.
3) Cost Vs Value: There is a difference between what buyers will pay for a feature and how much it costs. A $100,000 remodel in a $200,000 neighborhood does not make a home worth $300,000. Likewise, a $70,000 backyard remodel probably doesn’t make your home worth $70,000 more.
4) Ugly Ducking: Nobody wants to live next door to an ugly duckling of a house. There is something about being artistic, but be careful to not become so odd that people start passing up nearby homes because of what you did.
5) Don’t be the Largest: Larger homes tend to have a lower price per square foot, so let someone else win the “You Built the Largest House” prize in your neighborhood. Besides, there is a price ceiling in a neighborhood market where buyers will simply begin to look at similar-priced homes in a better area rather than buy the biggest house in an inferior area at the same price.

This post wouldn’t be complete without an example of an overbuilt house I saw a few years ago. See if you can spot it in the short video clip below (or here):

Any thoughts or stories to share? Comment below.

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Filed Under: Appraisal Stuff, Random Stuff Tagged With: example of overimprovement, Home Appraiser, House Appraiser, how to know if you're overbuilding, overbuilding in neighborhood, Overimprovement, principle of conformity in real estate, questions to ask before a remodel, questions to ask when remodeling, sacramento appraisers, things to do to add value

10 signs you’re overbuilding for the neighborhood

March 5, 2012 By Ryan Lundquist 6 Comments

top-10How do you know if you’re overbuilding? Here are ten signs for your mental checklist if you’re considering a significant addition to the size of your home.

You are overbuilding…

  1. If your house is going to be twice as large as all others in the neighborhood.
  2. If you no longer need Neighborhood Watch because your house towers over all others and is a watchtower in and of itself.
  3. If you have double the bedrooms of other homes in the neighborhood.
  4. If your house is mistaken for a motel or residential care facility.
  5. If you can see in every backyard on the street.
  6. If what you are building will yield little value in the resale market.
  7. If the larger size removes the rear yard and thus creates a negative for buyers.
  8. If prospective buyers think “Yikes, what were they thinking?” or “I would not want to live next to THAT house.”
  9. If shade from your house lowers energy bills for neighbors on every side.
  10. If buyers don’t have the expectation for such a large house in the neighborhood.

Obviously some of the points are only for fun, but you get the gist. If what you are doing is not consistent with the look and feel of the neighborhood as well as the expectations of the marketplace, then you’re probably overimproving your property. Watch a fun 30-second clip below of an overbuilt house I saw in Sacramento (and here is another in Woodland).

Anything you’d add to the list?

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Filed Under: Resources, Videos Tagged With: 10 ways to know you're overbuilding, appraiser in Sacramento, example of overbuilding, Home Appraiser, how to know if you're overbuilding, McMansion, overbuilt for neighborhood, Overimprovement, superadequacy

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