The real estate market is a fickle lady these days. Homeowners are continuing to take on home improvement projects to enhance their living space. If you hope to recoup all the dollars spent on home improvements, pick projects wisely. Prioritize projects that will add value to a home without adding to monthly costs and most of all determine how far to take a project. The National Association of Realtors (NAR) conducts an annual survey reports what home projects add the most value to a property. For instance the number one ranked project is upgraded siding which is reported to increase value by over 100% of what it cost to complete.
When prioritizing projects consider the following:
What gives you the biggest bang for your buck? Think first about replacing vs. remodeling. A new front door will have a high percentage returns. While a room addition may only return 70% of the cost. No matter if you are replacing or remodeling focus first on projects that will add value but not increase the monthly expense to maintain the home.
When does a project become over improvement to the property? The idea of a $10,000 AGA 6-burner range may be appealing, but would a home buyers value it the same knowing that your neighbors all have a 4 burner electric range for under $1,000. NAR uses the concepts of a minor, upscale and mid-market improvement. Depending on where you live a scope of a project may return different results. If you live in a neighborhood of three bedroom houses, building an addition to add two more bedrooms will give you space but not a big property increase. Use your neighborhood as a guide and strive not to be the biggest and best house on the block.
Outside Curb Appeal or Interior Convenience: Never underestimate how a house looks from the street. Outside updates and good maintenance will add tremendous value. According the National Association of Realtors, upgrading siding, adding a deck, replacing windows and finally replacing problem roofs are four projects that will yield a high percentage of their cost back in value. Interior Projects like a mid-range bathroom remodel or a minor kitchen remodeling will also return a very high percentage of their cost back in the form of increased property value.
How long are you living in the house? Remember when people stayed put for life when they bought a house to settle down? This is no longer the case; we live in a mobile society. If you are sure that you will never be moving and this is your age in place home, do what you want at a level you can afford with the full knowledge that you will never get out of the house what you put in. If you intend to stay only for a few years, manage scale and scope of the projects prudently.
