Home Improvements That Pay Off
by Andy Cook
Your home is likely the single largest investment you’ll make in your lifetime. Over time, you will update and upgrade your home, sometimes out of necessity, sometimes out of desire to change with the times.
Certain home improvements yield great payoffs, providing increased comfort and enjoyment to those living in the house, boosting marketability and increasing resale value if and when you are ready to put your house on the market. Other home upgrades, however, can cost you thousands of dollars with little return on your investment – meaning you won’t be able to recoup the money when you sell.
This isn’t to suggest that you shouldn’t have a basement featuring your love of all things Harley Davidson or Philadelphia Flyers; if you don’t plan on moving for many years, there’s no reason you shouldn’t customize and enjoy your home to its fullest. However, if you have plans to move in the next 3-5 years, the choices you make today can help your home stand out from the crowd tomorrow.
“Buyers love to see good kitchen and bath remodels. Unfortunately, for the seller, those modifications can be very costly and are almost impossible to recoup all the costs associated with the project. On the other hand, a kitchen update (counters, flooring, appliances, or a cabinet reface) are much more cost effective and get the seller much greater value,” says Annie McGeary, Realtor with Re/Max Real Estate in Allentown.
The recently released 2014 Remodeling Cost vs. Value Report by the National Association of Realtors and Remodeling Magazine shows that even small projects can have a great return on investment.
This annually published report reveals that you’re likely to make back more money on minor renovations and basic maintenance (e.g. kitchen update under $15, 000 or new siding), vs. a large renovation (major kitchen or bathroom remodel), although both of these were around a 64% return. Interestingly, replacing your front door and garage door recouped more than 80% of the cost, and replacing your windows were also rated high, returning almost 70% at time of resale. This also doesn’t include the savings you’ll see with decreased heating and cooling costs, an added bonus.
Of note in the Cost vs. Value report, and given the amount of snow we had this past year and the demand from the market, installing a back-up generator (which can keep your house running during a power outage), increased 28% nationally to a high of 67.5% of cost recouped.
Even though it may not be very stylish, taking care of behind-the-scenes items like your furnace and hot water heater are also important for you, as well as future buyers. Buyers will assume that the roof won’t leak, that the air conditioning will work, and the windows are double-pane for efficiency. Deferred maintenance can scare people off. Taking care of these things now will pay off in the future. Additionally, some of these items may even be eligible for a tax deduction.
McGeary also addressed the important issue of curb appeal – how your home looks from the outside. “Exterior upkeep is always a plus. Updated windows, new garage doors, exterior doors, gardens and walkways go a long way in assisting the sales process and are some of the projects that give owners the biggest bang for their buck,” she added.
Over-improving your home (for example, a professional cooktop and Sub-Zero drawer refrigerator units in a $150,000 home) is an expense you’re likely not going to recoup. However, if you have a passion for cooking and you plan on staying in your home for the foreseeable future, why not have
professional-grade appliances?
McGeary also shared her insights regarding an often-overlooked space in the homes she sees. “One other update that buyers love to see is a finished lower level. It holds a lot of weight in the buyer’s eyes and while you can go over the top and spend a lot of money, a modest renovation (drywall, moldings and carpeting) room is affordable and adds the value that a seller is seeking.” The Cost vs. Value report agrees: a basement remodel has a cost-to-value ratio of almost 78%.
If you aren’t sure whether an upgrade or update will increase the value of your home, seek advice from someone who knows the market. An informed decision makes for a better decision.
