Avoid pitfalls of overbuilding for your neighborhood

Overbuilding is one of the major mistakes people can make when remodeling their homes.

So much so that real estate agents refer to it as the most commonly broken real estate commandment: "Thou shalt not overbuild."

Overbuilding occurs when home?owners sink too much money into a house when either the market or the location (or both) cannot support the extent of the remodeling project.

In an attempt to recapture their remodeling costs when selling, homeowners then price themselves out of their market. No real estate agent wants to show an overpriced house, and no homeowner wants to take a substantial financial loss on their property.

While most people these days aren't remodeling for the quick resale, and few are brave enough to try flipping houses in this market, you still need to think about how your remodeling choices will affect your future resale potential.

In the planning stage of your remodel, consult with a Realtor to ask them three questions:

1. What realistic value would they place on your house "as is"?

2. What is the price range of homes that are selling in your area?

3. In their opinion, what home improvements will most improve your home's resale value?

A Realtor can create what is called a comparative market analysis (CMA). A CMA shows the active listings of comparable homes in your neighborhood and their locations. It gives you an "apples to apples" comparison from all the sales pending and the homes sold from the past six months with the actual sales prices.

A Realtor can also give you an analysis of the average appreciation rate for your location, which will help you understand when you could expect to recoup the projected cost of your remodel.

Understanding what you can do within the parameters of your neighborhood will be an important step to avoiding overbuilding.

Doing this due diligence, before you spend any money, will help you set a budget that won't come back to haunt you when you go to sell your home.

Realtors can also offer opinions on what is worth overhauling in your home and what may just need a little upgrading.

They can help you figure what is really going to make your home sell faster and what won't affect your asking price at all.