Remodeling Returns IN A SLUGGISH MARKET

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.