Overimprovement | Propertylogy

Overimprovement

By on December 21, 2018

Overimprovement refers to improvements made at a site with a value that far exceeds the value of the land.

While some land owners have their unique reasons to spend a lot of money on building or upgrading a house, from an investment standpoint, such acts are somewhat similar to superadequacy.

Sometimes people don’t buy real estate for investment purposes and see them as homes.

An example of overimprovement can be a site with a land value of $25,000 and a market value of $100,000 including the house. However, the owner spent $150,000 to build that house. The excess $75,000 is an overimprovement.

A $1m dollar house intentionally constructed in a neighborhood filled with similarly sized homes valued at $500,000 is also a type of overimprovement.


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