Cost vs. Value, the truth before you start
Cost does not always equal value when you are looking to do a renovation. Over-improving the kitchen, bathroom, and other critical sections of the property, you will not always get dollar for dollar back. You should discuss your project with a home improvement person, realtor or real estate appraiser if you are planning a renovation.
If you do the renovation try not to make it too customized. When you go to sell the home, the typical buyer may not want that type of customization.
When some people do additions, they do not expect to get back their full cost, because they made special improvements. Ex. An example is doing an addition for their relatives. The market is not always willing to pay for this special improvement.
With new construction, there is sometimes a lot of premium. A discussion with some appraisers that the cost of the lot premium does not always increase or stay the same over time. It has actually decreased over time. In one marketplace a builder was adding inground pools with new construction purchases. They did a few and stopped. The market did not support it.
When I did an addition on my house, I did cedar impression siding on the whole house. It looked good I did not get my cost back. The old siding was replaced with the cedar impression. I added a front cover porch, it looks good. Again, I did not recover my cost from it.
You can go into the marketplace and see what people are paying or looking at to see if cost equals value.
If the improvements are not common in the area, there may be a more substantial difference cost to value. The “principle of substitution” also plays a part with the cost to value. The principle of substitution says that one person may not pay the same for that renovation as the next person.
These are well accepted and document theories.
Keep in mind that when making adjustments, we are attempting to estimate the contributory value ( positive or negative ) of each characteristic or amenity of the subject versus the comparable’ s and not necessarily the financial cost of each item.