In a sluggish housing market, does it make
sense to spend money on remodeling projects?
Probably, according to the 19th annual Cost vs.
Value Report as published in Remodeling Online
(remodeling.hw.net).
According to the report, just as home sales
have undergone a correction after record
growth, the value of home improvements
at the time of resale have adjusted to 2002
levels. In addition, the report indicates that
the norm is achieved when home improvement
costs stay within the range of 20 to 25 cents
on the dollar. The other 75 to 80 cents return
is recouped at the time of sale through increased
resale value.
There are other factors besides cost for
homeowners to consider when thinking about
remodeling projects. While remodeling projects
certainly add value to a home, the return
on investment can be unpredictable based
on factors beyond a homeowner’s control.
These factors can include regional home values,
the overall condition of the home, the value
of comparable homes in the area, and the
existence and cost of new homes in the area.
Homeowners also need to consider the need
for a remodel as a way to improve the home’s
quality and function, as well as their enjoyment
of the finished project.
If the remodel is not an absolute necessity,
such as a plumbing, electrical or HVAC upgrade,
it can be useful to check with a professional
remodeling contractor as well as your favorite
real estate professional before you begin the
project. They can advise you regarding the
return you might realistically expect to
receive on the remodeling project.
However, for most people, the two main
reasons for remodeling their homes do not
include “because it’s a good investment”.
According to an article posted on
Bankrate.com, homeowners typically
undertake a remodeling project to make
their homes more livable and enjoyable
and to update their home’s appearance as
decorating trends come into and go out of
style.
According to Bankrate.com’s top five list,
bathroom remodels are the most popular,
with 16 percent of survey respondents citing
this improvement as the one they’ve completed most recently. The next four in order of popularity, include kitchen
remodeling, room addition remodels, floor
coverings, and painting and wall coverings.
When seeking additional space,
homeowners are most likely to consider
adding living space, such as a den or a
bedroom.
Whether you’re seeking an updated decor or
adding more living space, you will want to
consider the return you may receive on your
remodeling project. The Cost vs.
Value study provides the following information.
You might expect kitchen and bathroom
remodels to really pay off, and they do, but
according to the 2006 study, the highest
return on investment occurs when homeowners
improve the siding on their homes. Replacement
vinyl siding brings a very respectable 87.2
percent return on investment when the project
is completed and the home resold. A minor
kitchen remodel is close behind, garnering an
85.2 percent return. It pays to remodel your
existing bathroom since you can expect to
recoup 84.9 percent of your expenses. Adding
a bathroom is another story, however. You’ll
only recover 74.9 percent of your investment.
While they may not be sexy improvements,
other outdoor repairs also are a good value.
Window replacements recover approximately
85 percent of their cost, with wood windows
outpacing vinyl by about two percent.
How about that sunroom you’ve always
wanted? Go ahead and put one in, but make
sure you stay in your home long enough to
enjoy it. It’s not going to help a great deal
with your home’s resale value, and you’ll only
recover 66 percent of your investment. If you’re
tired of the look of your home office, go ahead
and update it, but again, keep in mind, you’ll
only recover 63 percent of what you spend.
But if you’re at the point where you just
can’t stand the fluorescent lighting and cement
floor, a remodeling project may indeed be worth
the money you spend.
You should also have your home inspected
prior to selling it says Tom Sansone from
National Property Inspections of Rochester,
NY, LLC. If the home is found to be in good
condition, then copies of the report can be
presented to prospective buyers showing
them that you had experts inspect the house
and that the house is in good condition. If
problems are found, you can correct them
prior to placing the home for sale, which
will reduce the possibility of those problems
getting in the way of your sale. Mr. Sansone
suggests that you have your inspector
perform a re-inspection after problems have
been corrected so that the inspector can then
provide you with an updated report showing
the house to be in good condition.
