Homeowners: Don’t do that, do this
Every homeowner wants to update and improve their home. But some renovations and improvements can make a big difference in the potential resale price of a home while others don't. Here are some expert tips on the improvements you should make versus the ones you should avoid.
Let's be honest, everyone wants their own bedroom. But what makes more sense, renovate an existing bedroom or add a new one?
DON'T: Add a new master bedroom suite.
While this project might make waking up every morning a little bit easier and more enjoyable, it doesn't make as much sense from an investment standpoint.
According to Remodeling magazine's Cost Vs. Value Report 2011-12 (© 2011 Hanley Wood, LLC.), the average master suite addition cost over $106,000, but only adds $62,874 to the resale value of the home. That puts it at the bottom of Remodeling's list for return on investment along with a sunroom addition and a home office remodel. All of these projects will add to your home's resale value, just not enough to offset much more than half of their high cost.
DO: Turn an attic into an extra bedroom.
Remodeling's report estimates that an attic bedroom will set you back just over $50,000 on average. However, this additional sleeping space can add over $36,000 to your home's resale price, allowing you to recoup 72.5 percent of the cost -- a far better return on your investment
If you're planning on selling your home, your property's exterior is a potential buyer's first impression. That said, some curb-appeal improvements are more cost-effective than others.
DON'T: Overpay for a front door.
You can spend more than $8,000 on fiberglass doors that can make your entranceway look like a castle gate. But in tough economic times, homeowners have a more cost-effective option, says Steve Melman, director of economic services at the National Association of Home Builders. (Photo at right courtesy of Pella® Windows and Doors.)
DO: Install a steel replacement door.
One of the most effective returns on your investment is to install a secure, attractive front door. Your front door, like your landscaping and paint job, is what potential homebuyers notice first from the curb. Melman says some potential buyers may bypass your home entirely based on the look and condition of your front door.
According to Remodeling's report, a new steel entry door can cost upwards of $1,200, but will add an average of $900 to the resale value of your home. A fiberglass replacement door costs an average of $3,536, while recouping only 56.3 percent of the cost. New garage doors are another solid investment, Melman says, recouping close to 75 percent of their cost.
Who doesn't want a new kitchen? But when it comes time to upgrade, is it best to go all out or simply make a few cosmetic upgrades?
DON'T: Expect a big return from a new kitchen.
Full-scale kitchen renovations cost a lot, but typically add less than two thirds of that cost to a home's resale price, says Deb Kearse, vice president for Kohl Building Products in Reading, Pa.
DO: Concentrate your efforts on highly-visible finishes.
A nice light fixture can make a big difference on how your home appears to prospective buyers, says Michael Labout, branch broker for ERA Shields Real Estate, in Colorado Springs, Colo.
"Granite countertops are becoming the standard," says Labout. The cost of granite is now about a third of what it was just a few years ago. Stainless-steel appliances are favored over all other colors, he says. "You could have the best black Bosch dishwasher in the world -- for most buyers the perceived value will be higher with a stainless steel Whirlpool," says Labout.
New windows might not be the most glamorous improvement you'll make to your home, but they just might be the most practical.
DON'T: Replace old windows with cheaper, inefficient windows.
If there are new homes for sale in your area, chances are potential homebuyers have had to listen to a real estate agent's spiel on the new home's energy-efficient features. That said, don't be surprised if a potential buyer grills you about the insulating value (otherwise known as the "R-Value") of the new windows you just installed. (Photo at right, Andersen EcoExcel 400 Series Double Hung Window, courtesy of © Andersen Corporation.)
DO: Chose energy efficient windows.
If you're planning to replace your windows anyway, consider paying a little extra for energy-efficient windows. The windows cost a little more, but they'll save you on energy costs and can pay for themselves in as little as four years.
Go big when going small
If you can't afford a large-scale improvement project, you can still add value to your home by simply taking basic home improvements one step further.
So, if it's time to replace the siding on your home, consider upgrading from vinyl siding to durable cement fiber board or adding a layer of continuous insulation under the siding. If it's time to replace plumbing fixtures, consider water-saving faucets that can help cut your water bill. These upgrades add to the resale value of your home while saving you some money on your utility bills in the meantime.
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Bendix Anderson has covered the housing and mortgage markets for more than a decade. His work has appeared in City Limits Magazine, America Online Housing Watch, Habitat Magazine, Affordable Housing Finance Magazine, Apartment Finance Today, ProSales Magazine, Sustainable Communities Magazine and Multifamily Executive. Anderson has been nominated for awards in publishing and journalism.
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