When To Apply a Cost-Benefit Criterion —
and When Not To

Clients frequently ask me if it’s possible to open up a wall, do an addition, add a dormer, etc.

My answer is always “yes” — because anything is possible to do, for enough money.

cost_benefitHowever, whether it makes economic sense to do something — that is, whether the enhancement will add more value to the home than it costs — is another question.

Example:  Opening a Wall

So, to take just one example, imagine a homeowner who wants to open a Kitchen wall to create more flow with the adjacent Dining Room.

If the wall isn’t load-bearing, such a project is straightforward (and inexpensive).

However, if the wall is load-bearing, a header or perhaps even a structural beam will be required.

Cost:  anywhere from $3k to several times that — making it less likely that the owner will recoup their investment.

Cost-Benefit Criterion?  Not Always

In fact, when clients ask me about a contemplated project, my first response isn’t to ask for details.

Rather, it’s to ask how long they plan to stay in their home.

If the answer is “forever” . . .  I encourage them to go ahead and do anything that they’ll enjoy and can afford.

P.S.:  Somewhat analogously, any vacant lot can be built on, subject to local zoning and setback requirements.

However, if the soil is too soft (or wet!), the builder will need to use pilings to keep the new home from settling.

The cost can range anywhere from $20k to $40k, depending on the home’s foundation size and how deep the pilings have to go.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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