Friday, November 12, 2010

Get the Most Bang for the Buck With These Renovations

From Fox Business News. Original article includes list of most cost-effective renovations by region.

"Some folks only care about how a home improvement will affect their quality of life and don't view it as an investment. If that's you, go ahead and put in the garden pagoda, media room (complete with popcorn machine) and three-story water feature if it makes you happy. But if you are keeping an eye on the bottom line, you'll want to understand how today's depressed markets and new financing rules can affect your home's resale value."


"The Home Valuation Code of Conduct (HVCC) gives those involved in a real estate transaction little say in who appraises the home, and less-experienced appraisers are getting much of the work for this reason. This means that the person who appraises your home for a buyer may have little understanding of what improvements are considered desirable in your neighborhood. In addition, few sales mean few comparables -- there may not be a similar home with similar upgrades to compare your home to. So appraisers will be more conservative in valuing your renovation."


"There are several principles to keep in mind when deciding what improvements to undertake.

* Curb appeal is king. Exterior improvements that don't cost an arm and a leg return a high portion of your investment back to you. That means new paint or siding, new exterior doors and cleaning up the yard pay off handsomely. However, over-the-top landscaping and in-ground pools do not.

* Bedrooms sell houses. There's a reason why real estate agents list the number of bedrooms first when they advertise properties. Everyone expects homes with more bedrooms to cost more. One of the best remodeling projects you can undertake is turning attic space into a bedroom. Converting empty space into "living space" instantly creates a lot more value per square foot.

* Modest- to moderate-cost improvements pay off best. It's always easier to recoup the cost of refaced kitchen cabinets, new flooring and paint than it is if you gut the place and install top-of-the-line everything. On a national level, eight out of the top 10 projects in terms of costs recouped were exterior replacement projects that cost less than $14,000.

* Correcting deficiencies is smart investing. Improvements that bring a property up to snuff help sell your home. Buyers notice outdated kitchens and worn flooring. Freshening up your space without going overboard makes your property more marketable.

* Be careful with energy improvements. While windows and siding costs can largely be recouped, more unusual upgrades like geothermal heating systems are risky. If you plan to keep your home for a long time, the costs may be covered by the energy saved, but when you sell, appraisers have a hard time giving you value for these things, especially if you're the only one in the neighborhood with such a system. On the plus side: You may get some tax breaks for making certain improvements."

Many of the regional lists contain one thing in common: steel entry doors. For about half the price, you can afford to purchase a steel-clad entry door plus installation--this is what I did, but not for resale reasons. My living room has a fireplace, and the old 60's wooden door was a fire hazard.


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