You've already decided to move rather than remodel, but now -- like so many others in similar situations -- you find yourself thinking abut remodeling anyway. Why? To make your house more appealing to would-be buyers, cut the time it takes to sell it and maybe even get more cash in hand when you sell.
And hey, while you're expanding, why not tuck in a new master bedroom suite above the addition? You'll get all of your money back when you eventually sell your house, right?
Not so fast. While many home-remodeling projects are a great way to add value to your home, not all of them are ironclad cash-back guarantees.
Before you invest a significant amount of your precious home equity into remodeling projects, it's wise to do a little homework on what kind of payback you can expect for various home projects in your area.
A good place to start is the Cost vs. Value report published annually by the National Association of Realtors, or NAR, and Remodeling magazine. The report provides a synopsis of the top projects, the average costs of the projects and their average rate of investment return at resale. It also gives you a city-by-city guide on what various home projects will pay back at resale.
Real estate experts caution that these numbers can differ significantly depending on your state, city or even neighborhood. So use these numbers as a starting point, but consider getting the advice of a Realtor and/or remodeling contractor before you commit to a big home project. These experts can familiarize you with remodeling payback figures tailored to your city.
|Top 5 'good payback' projects|
|According to the NAR/Remodeling magazine's 2005 Cost vs. Value report, the projects that will pay back the most at resale are:|
|5 projects to boost home value|
1. Upscale siding (new fiber cement) replacement.
Average payback: 103.6 percent of cost
Estimated job cost: $10,393 for 1,250 square feet
National average resale value: $10,771
"Siding makes a huge difference in a house's resale value, because it's one of the first things you see. It really defines the condition of the home," says Moe Veissi of Veissi & Associates Inc., in Miami. "If other houses around you have old aluminum or vinyl siding and your siding is nicer and newer, buyers will notice you. With this project, you make your house more attractive -- you're not just improving your insulation value."
2. Midrange bathroom remodel.
This includes updating an average 5-by-7 foot bathroom that's at least 25 years old with moderately priced fixtures, a double-sink vanity, a ceramic-tile floor and vinyl wallpaper.
Average payback: 102.2 percent of cost
Estimated job cost: $10,499
National average resale value: $10,727
"Improving an existing, but outdated, bathroom is almost always a good investment," says Finley Perry of F.H. Perry Builder in Hopkinton, Mass. "An up-to-date bathroom makes your home look like it's been kept in good repair, and that's what all prospective homeowners are looking for."
However, Perry cautions homeowners not to try to personalize their bathrooms too much or spend megabucks trying to turn them into ultimate home spas. "Your home is a valuable asset, and you want to treat it respectfully whenever you remodel," he says.
In other words, think twice about adding a pricey imported soaking tub or three separate shower stalls for your growing family's convenience. Those renovations might not fit the taste of a buyer 10 years down the road. If that happens, the money you spent on your bathroom renovation is down the toilet, so to speak.
3. Minor kitchen remodel.
This consists of giving a functional, but dated, kitchen a makeover. It includes new cabinet doors and drawers (with cabinet boxes left in place), a moderately priced wall oven, cooktop, countertop, sink and faucet and resilient flooring.
Average payback: 98.5 percent of cost
Estimated job cost: $14, 913
National average resale value: $14,691
Along with bathrooms, kitchen updates are almost always among the smartest remodeling projects for resale value, say the pros. "Home buyers seem to gravitate to the kitchen first when they're looking at a house," says Joe Traynor, a real estate appraiser in Indianapolis. "And as appraisers, we do give extra credit to houses with updated kitchens.
"However, I've also seen homeowners go too far -- they might put granite countertops and top-of-the-line stainless-steel appliances in a very modestly priced house," he says. "Those improvements aren't going to help the home's value in the long run, and the owner definitely isn't going to get his money back when he sells."
4. Midrange siding replacement.
This more modest variation of the No. 1 ranked project (upscale siding) includes replacing 1,250 square feet of siding with new vinyl siding and trim.
Average payback: 95.5 percent of cost
Estimated job cost: $7,239
National average resale value: $6,914
The value of this project is in its immediate curb appeal: New siding cleans up a house quickly. However, Perry points out that vinyl may not be appropriate and could actually detract from a home's value in historic neighborhoods or upscale areas where traditional wood siding is still the preferred material.
5. Attic bedroom remodel.
This entails converting unfinished attic space in a two- or three-bedroom house into a finished bedroom and bathroom with shower. It includes a new shed dormer, new windows and closet space in the eaves.
Average payback: 93.5 percent of cost
Estimated job cost: $39,188
National average resale value: $36,649
Because this is a relatively expensive undertaking, real estate experts suggest you do an attic renovation only if you're going to live in the house for a while (preferably five to 10 years) and enjoy the reclaimed space yourself. Over the long haul, this project adds significant value to your home because it creates brand-new living space and isn't just a cosmetic improvement.
Keep in mind, though, that attic remodels don't make sense in every neighborhood and part of the country.
"In Florida, most of the attics aren't big enough to stand up in, so remodeling them wouldn't make sense at all. Plus there's the heat issue -- these rooms would be sweltering hot for us and very expensive to cool," says Viessi, a Miami Realtor.
"This is a good example of a remodeling project that would be wise to discuss in advance with a Realtor who's familiar not just with housing in your area, but in your specific neighborhood," says Viessi. He says good Realtors are always happy to spend time talking with you about the wisest renovation projects for your home -- even if you're not planning to sell your home anytime soon.
Other top resale projects from the Cost vs. Value report ranked by percentage of cost recouped at resale, include:
- an upscale bathroom remodel: 93.2 percent.
- a major kitchen remodel: midrange, 91 percent; upscale: 84.8 percent.
- a deck addition: 90.3 percent.
- basement remodeling: 90.1 percent.
- window replacement: 89.6 percent.
- a bathroom addition: midrange: 86.4 per cent, upscale 85.8 percent.
- roofing replacement: 84.7 percent.
- a family room addition: 83 percent.
- a master suite addition: midrange 82.4 per cent; upscale 80.1 percent.
- a home-office remodel: 72.8 percent.
While a good return on your investment is important in every remodeling project, experts say that the most important factor in your decision should still be whether the project improves the way you live in your home now.
"The fact of remodeling is that you never get your money back instantly," says Perry. "If you're undertaking a project because you're going to stay in your home awhile, and it will enhance your lifestyle, then great -- do it. It's tough to put a price on the happiness many young families get from fixing up their house and truly enjoying it for the next 20 years."
By • Bankrate.com