Don’t overstretch when buying a home or renovating an existing one.

Even if it feels like a good idea in the moment, it often proves to be a costly mistake.

“It is very important that people make smart financial decisions when they’re buying or renovating a home. And some people will get so emotionally charged that they’ll run in a direction, they’ll do something that they’re never going to recoup that money if they have to sell,” Drew and Jonathan Scott said on Yahoo Finance’s Opening Bid (video above).

“I always say there’s two types of renovations that you do. There’s renovations that will actually increase the value of a home … There’s other stuff that it may help you sell. People really like it, it looks pretty, but you’re not getting any more money.”

The brothers advised homeowners not to overleverage. “There’s still a lot of people that are spreading their selves a bit too thin,” they added.

Jonathan and his twin brother, Drew, are the dynamic duo from HGTV’s “Property Brothers,” a show where they help families find and renovate homes. The brothers Scott have also branched out with the Healthy Home Innovation Fund, which invests in tech companies that innovate in the residential sector.

More recently, they debuted a new HGTV show called “Under Pressure.” The premise is to assist would-be homebuyers in the purchase process and then help them add smart upgrades to the property.

Overextending on a home purchase or a lavish renovation often creates something industry experts call the “house rich, cash poor” trap. That’s where an individual’s net worth is tied up in an illiquid asset (home) while their monthly liquidity disappears.

Purchasing a home beyond one’s financial means leads to a major financial burden. In addition to the higher mortgage principal, homeowners face much more expensive property taxes, insurance premiums, and utility costs.

Over-renovating a house — especially in the unpredictable 2026 economy — risks a negative return on investment if the upgrades exceed the neighborhood’s price ceiling.

A final word of caution from the renovation OGs: Don’t overspend on a house in a hot market just because. Stay disciplined.

“That $300,000 one-room house … not a good investment,” the brothers said.

Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.