Home Improvements

“… 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.

Your Reasons for Home Improvement

The first piece of advice is never, ever try to 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 your own purposes, you at least know you will get value from enjoying the improvements yourself. However, a 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 before you sell, start with minor cosmetic changes like painting. These improvements are fast, inexpensive, and there is little risk.

If you know that you will be living in your 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 to determine which home improvements will have the greatest pay-off, and balance this with which ones you would most like to enjoy. For instance, there is little point in renovating the basement if you never go down there. It’s better just to leave it as a blank slate for the next homeowner.

The following is a list of which home improvement initiatives often produce the best results upon resale value. Naturally, these statistics are not without flexibility. There are many factors –– including your local housing market and what kind of improvements you undertake – which can affect resale values.

  • Kitchen Remodel (minor) – 125%
  • Basement Remodel – 98%
  • Bathroom Addition – 96%
  • Kitchen Remodel (major) – 92%
  • Bathroom Remodel – 90%
  • Exterior Paint – 90%
  • Master Bedroom – 86%

From this list, it’s clear that home improvements to kitchens and bathrooms pay excellent dividends. Not only that, but they are often also the most enjoyable changes for your everyday living.

Home Improvements with a Low Return:

General improvements in attics and basements yield a very low return unless you do something radical. Then the risk is very high, but the return could be enormous. For instance, a tranquility tank is not going to appeal to many people, but if you find a buyer that is all about tranquility, you’ll make your money back, and more.

Use Good Judgment

When undertaking these improvements, always use your best judgement. Take a look around your neighborhood and see what kind of home improvements others have done. You’ll want your home to be consistent in the community, both for the sake of conformity, and because certain improvements are popular with different people. You’ll want your improvements to match the style and niche 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, and likely won’t share your artistic vision. Avoid bold colors and flamboyant designs. Tasteful and respectful improvements will be most well-received. If you must be bold and flamboyant to suit your needs, try to limit it to cosmetic aspects of the home such as paint, furniture, and fixtures, as opposed to windows and cabinets, which will be more difficult to adjust.

To really understand which home improvements will pay off in the sale of your home, take into account the following variables:

Kind of Improvement

As mentioned before, kitchen and bathroom home improvements often yield the best pay back, whereas finishing a basement yields the lowest.

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, high risk can mean a high pay-off. To manage this risk, you should be very familiar with who your potential buyers are, and what they are looking for. The following is a list of small changes you can make to increase the selling power of your home:

  • Upgrade or add ceiling fans
  • Add new doors
  • Fresh paint
  • Garden sanded
  • Decks and fences stained
  • Fresh wallpaper

Fad = Bad

What is chic today can be the stifled snicker-inducing mistake of tomorrow. Take into account shifting social values. For instance, public space is rapidly dwindling. There are no more block parties, no more picnics in the park. As a result, buyers are looking for spaces where they can casually entertain. You can take factors like this into account for your renovations to ensure a larger pay-off. An easy solution in this case would be to add a deck, which is rapidly becoming a home ownership standard.

Cost

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. Useful renovations are the least risky, because even if you don’t see $20,000 added to the sale of your home after a kitchen renovation, you can get $20,000 of use out of the kitchen if you stay in the home long enough.

Self-improvements are another option for cash savings on renovations. Taking on a hands-on approach will also give you a more in-depth understanding of your home before taking on other projects, or selling your home.

New Windows

New windows are typically not a good resale investment. You can tell the buyer that you just added new windows, but unless you can demonstrate a significant savings on your electricity and heating bill, it will not add value to the sale. Therefore, replacing windows is not recommended just before the sale of a home.

Creating New Space

Whether this means taking space that was poorly used before, or building in an addition, it can be a good idea to open your home up. Look at design before functionality. If you are improving your basement, don’t install a bar. Instead, leave the space open for further modifications and improvements, like a blank slate for your buyers. Studies, solariums, and offices should be treated the same way: let the buyer decide what to do with the space.

To Help You Decide

Some clients are surprised to learn it is easier to sell and buy again than to endure a major remodeling. Call the Dave Ozubko Real Estate team for up-to-the-minute real estate market information to help you make your decision.