Smart homeowners consider resale value when choosing new home improvement projects. Most people plan to sell a home sooner or later, and investing thousands of dollars into a remodel can increase the home’s property value or wipe it out completely. It’s important to understand what your local market will bear; your home’s value is determined by your neighbor’s value.
For example, every neighborhood has a price ceiling over which high-end upgrades place some homes out of the market. For example, in an area that typically has a $250,000 listing price, the homeowners who install a $10,000 Viking stove will never see a return on their investment. The home is incomparable with other homes in the area. A better investment in a lower-priced area would be in insulation, flooring or a new roof, all of which increase the home’s longevity and make it easier to recoup the cost of remodeling.
To appeal to a larger audience of buyers, do-it-yourselfers should resist the urge to display their individuality. It pays to choose neutral and therefore changeable big-ticket items like countertops, cabinets and flooring. Buyers confronted with bold colors and snazzy textures may wonder if the sellers are masking a major defect in the home. They may also factor the cost to replace these items into their offering price.
So what should you do–and not do–to recoup your investment in an unstable real estate market? Glamorous and sexy kitchens and baths are big selling points because new homebuilders focus their attention on these rooms. However, even the most beautiful kitchen remodel in the neighborhood will be overlooked if the roof is leaky. Focus on structural problems first.
Good insulation immediately pays off in reduced heating and cooling bills. Buyers also want to know that internal systems are in working order. If your home has wiring or plumbing issues, resist the urge to spend your remodeling dollars on trendy granite countertops and instead, repair your systems. A new furnace is more important to wary buyers than a tile backsplash in the kitchen. According to a recent study, new siding topped the list at return on remodeling investment, averaging homeowners 92.8% of cost returned at the home’s sale.
If you are assured your home is structurally sound and meets code, where best to put your remodeling dollar? Kitchens and baths are the next best place to invest in upgrades. In some markets updated kitchens and bathrooms can return more than 100% of their cost to sellers, even for minor remodels.
Green remodels not only reduce your carbon footprint, but can cost you less and make your home more attractive to eco-conscious purchasers. The combination of energy savings and buyer appeal can net returns of up to 200%. Use recycled materials like cabinets, windows and doors to save retail costs; even items that may not be considered earth-friendly are still better off being used than in a landfill. Design kitchens around cooking, and consider areas for composting and larger areas for food preparation. Use aerated faucets and install low-flow toilets and showerheads in bathrooms.
Other rules to remember when remodeling your home:
Home improvement is a rewarding hobby when correctly researched, planned and executed. Take the time to consider your best investment before you commit, and ensure that you have the skills and the tools you need to get the job done. When you have completed your remodel, there is no better feeling than enjoying the fruits of your labor.