“… an 80% recovery at resale is still a 20% loss…”
Whether you’re considering remodeling worn-out surroundings, enlarging your home for a growing family or rebelling against yesterday’s standards, you have important investment choices to make. You’ll want to choose home improvements that not only pay off in recovery of the money you spend, but also help you get a better price for your home when and if you sell it. Keep in mind that, considering today’s market, it may be a smarter move to sell and buy again rather than endure a major construction project. After all, even an 80% recovery at resale is still a 20% loss.
With my help as your REALTOR®, we will perform a complete assessment of your home and decide together which prospective improvements will add value and which areas are better left alone.
Your Reasons for Home Improvement
The first piece of advice is never, ever try and renovate a part of your home, simply for the purpose of selling. You are incurring a huge risk here. The housing market can be volatile, and you never know which amenities are going to pay-off. If you renovate for yourself, you at least know you will get value simply by the enjoyment of the change. Your potential buyer may walk into the improved room, declare they don’t like it, and then change it immediately. They won’t care if you just sunk $30,000 into it. If you are looking to spruce up your home a little bit, before you sell, just make minor cosmetic changes, like painting. They are fast, inexpensive and there is little risk. If you know that you will be living in a home for some time, but you also know that in the future (perhaps when all of your children move out) you’ll be selling it. You should try and balance which home improvements will pay-off the most, and which ones you would most like to enjoy.
The following is a list projecting which home improvement initiatives often produce the best results upon resale value. Naturally these numbers are not rock solid. There are many factors including your local housing market and what kind of improvements you undertake.
- Kitchen Remodel (minor) – 125%
- Bathroom Addition – 96%
- Kitchen Remodel (major) – 92%
- Bathroom Remodel – 90%
- Exterior Paint – 90%
- Master Bedroom – 86%
So, here you can see that home improvements to kitchens and bathrooms, pay excellent dividends. Not only that but they are often the most enjoyable changes for your everyday living.
Home Improvements with a Low Return:
- Improvement of attics or other low day-to-day use areas
- Swimming pools
- Overbuilding or over-improving for the neighborhood
- Extensive or elaborate landscaping
- Wall-to-wall carpeting
- Invisible improvements, such as a new plumbing or HVAC system, unless absolutely necessary
Use Good Judgment
When doing any of these improvements, you should also use your best judgment in taste. Take a look around your neighborhood and see what kind of home improvements others have done. You’ll want your home to be consistent. Both for conformity, and also because certain improvements are popular with different people, and you’ll want to conduct them to match the pulse of your community. You should also keep the original design of your home in mind. Be sure to use similar materials and building styles. A hybrid home of new and old can look daring and artistic, but most homebuyers are very conservative (it is a huge investment) and they may not share your artistic vision. No bold colors, no flamboyant design.
To really understand what home improvement is really going to pay-off, take a look at the following variables. They will give you a pretty good idea of what you should be considering when set out to do home improvements. Next, please consult me about any improvements that you are considering so that I can give you an accurate estimate of your return on investment.
Kind of Improvement
As was mentioned before, kitchen and bathroom home improvements often yield the best pay back.
Scope of Improvement
Often with home improvement, the small changes often add up to more than the sum of their parts. The larger the scope of the home improvement, the more risk you will incur. That said, risk could turn into a high pay-off. You really have to know who your market is and what they are looking for. The following is a list of small changes you can make, which will make a huge difference:
- Upgrade or add ceiling fans and lighting fixtures
- Fresh paint on walls, doors and trim
- Pressure wash house exterior, driveway, patio
- Replace old carpeting with new flooring
Fad = Bad
What is chic today can be the stifled snicker-inducing mistake of tomorrow. Take into account shifting social values, but remain true to classic ideals and what is most important to the majority of home buyers.
Do not expect that if you put $20,000 into a renovation, you will automatically see $20,000 added to the value of your home. However, even if you only can recoup $10,000 of that, if you are there long enough you easily get $10,000 of use from a new kitchen. If possible, you should also think about doing as much of the home improving yourself as you can. Having a hands on approach will give you flexibility, and a new understanding of your home, that you can apply to other home improvement projects. It will also save you lots and lots of cash.
Not a good resale investment at all. You can tell the buyer that you just added new windows, but that doesn’t really matter. Unless you can demonstrate a significant savings on your electricity and heating bill there is really no point. Therefore, replace windows if they truly need to be, but never just before you are selling your home.
Creating New Space
Whether this means taking space that was poorly used before, or adding an addition, it can be a really good idea. If you can take any room and give it a purpose, even just for the showing of the home, it is easier for buyers to visualize the functionality of your home. For example, if you have an extra bedroom that does not really function as anything–except maybe a “catch-all” for boxes and miscellaneous–let’s give that room a purpose, or at the very least, clean it out and remove the clutter.
To Help You Decide
Some clients are surprised to learn it may be easier to sell and buy again than to endure a major remodeling. Let’s sit down to access your home improvement plans and what makes the most sense for you given current market conditions and remodeling costs.