Cost vs Value: The 4 Best and 4 of the Worst Remodeling Projects
To begin with, I have just a couple notes of caution for you regarding cost vs value in a home remodel. Always consider not only the value of your own home but the value of all properties surrounding it. Research what buyers are looking for (or not) in a home. And be aware of the current status of the Real Estate market in your area if your intention is to sell the home anytime in the near future.
Over-improving is always a danger. If your updates raise you to the status of the most expensive home in the neighborhood, you’ve already lost a bit of your property’s overall value (taking into consideration replacement cost as opposed to market value).
It may seem like a dream-come-true when you install that room full of home theater equipment or the olympic-size swimming pool with water features and a swim-up bar, but be sure that potential home buyers in your neighborhood are looking for those specific features. If not, you’ve just blown several years worth of your entertainment and/or home maintenance budget while crippling your home equity at the same time. Home buyers most requested upgrades have long been updated kitchens and baths.
If your intention is to remodel your home to sell it at it’s optimum value, you may want to rethink the rehab altogether. Ask your realtor what current market conditions dictate. Are lower priced homes selling quickly? Or are home sellers needing to negotiate repairs? Market conditions play a huge role in the cost vs value game.
It’s important to protect yourself, and be aware of the laws in your State. Is your contractor licensed and insured? Will your homeowners insurance cover damage done by you if you’re doing the work yourself? Which projects need permits? Does your State require that the job be done by a licensed contractor? Know your limitations and the rules.
I agree with most of the advice in the article below but I have to insert one caveat regarding solar panels. In the case of rented solar panels, the rental cost, in many cases, meets or exceeds the amount of savings. In my experience, a home with rented solar panels will very likely NOT sell as quickly or at a higher price than similar homes in the neighborhood without solar panels.
Home Renovations That Can Hurt (and Help) Property Value
By Brooke Nally Editor’s Note: This was originally published on RISMedia’s blog, Housecall. See what else is cookin’ now on blog.rismedia.com
If you’re into renovation projects, then updating and revamping your home can be a lot of fun. But before you get too excited about knocking down walls and setting up a custom movie room, you might want to consider resale value. Flashy renovations don’t always yield the best returns, so you’ll need to take care when picking projects.
To make things easier for you, here are four remodels to avoid and four to invest in.
Remodels to Avoid
An indoor basketball court, wine cellar, sauna, or even a movie theater won’t often recoup the high building costs. Luxury add-on rooms are hard to pitch to buyers unless you’re living in an upscale housing market—the average homebuyer won’t be willing to pay for them. Further, rooms that depend heavily on wired electronics, like home theaters, are hard to keep current because TVs and speakers are constantly advancing.
The average cost to build a pool is $39,084—a hefty price tag that is seldom recovered once the home is sold. It’s widely accepted throughout the industry that a homeowner will lose money by adding a swimming pool. Homebuyers don’t want to deal with the maintenance cost of a pool (which can cost as much as $2,000 a year), the added insurance premiums, and—if they have young kids—the safety issues.
Though gold-plated crown molding or mosaic-tile backsplashes may feature prominently in your ideal vision for your home, they often turn out to be the average homebuyer’s worst nightmare. Passing fads or niche trends rarely stick around long, so if you miss the brief window when your remodeling choices are in, you’ll end up paying for it later.
Changes Contrary to Area Standards
If you aren’t watching the trends common to your area, you could end up losing a lot of money. A home that totals $600,000 after all the renovations won’t sell in a neighborhood where homes are netting half that price. Likewise, knocking down the walls of extra bedrooms for an open layout won’t be appealing in a family-oriented neighborhood.
Remodels That Pay
You don’t want to go cheap on a standard front door. At roughly $1,000, steel doors are comparatively affordable, durable, low maintenance and burglar resistant. As an added bonus, the National Association of REALTORS® reports that steel door upgrades show the highest return on investment of any home remodel, at over 100 percent of the cost.
As the price of solar panels continues to drop, the energy payback on installing them is becoming greater and greater. The average rooftop solar system is now paid off in seven-and-a-half years. After that, panels are a big money-saving asset. A study by the Lawrence Berkeley National Laboratory notes that homebuyers “consistently have been willing to pay more for a property” with solar panels—a premium of around $4 per installed watt, on average.
The exterior of your house is the first thing potential homebuyers see, and you want to make the best first impression. This is part of the reason redoing your siding is so profitable. New siding recoups around 80 percent of the initial cost, according to the National Association of REALTORS®, thanks largely to the increased curb appeal and improved energy efficiency it provides.
Access to broadband speeds is considered an essential utility for today’s connected homebuyer. Research shows that faster internet speeds increase your home value by as much as 3 percent. Homeowners can prepare their homes for higher broadband connectivity by working with area providers to install requisite equipment and wiring. Building out wall ports and cable-hiding baseboards is a good move to attract buyers, too.
Even if you’re not considering selling your home just yet, keep potential selling benefits in mind. Intrepid homeowners know that the best remodels will increase both quality of life and listing price, so take care to invest in projects that will net the biggest returns.
Reprinted with permission from RISMedia. ©2017. All rights reserved.
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Bill Salvatore / Arizona Elite Properties
Residential Sales, Marketing, and Property Management
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