We live in a "home improvement" world. If you spend a couple of hours watching nightly
television, you'll see enough home improvement projects to fill an entire year
of weekends. Every town seems to have a home improvement warehouse, and every
homeowner has thought -- at least a little bit -- about some future
project.
So, which home
improvement projects are going to bring the most return? And exactly what is the difference between home improvement and maintenance?
That Roof Cost $10,000 and that Make My House Worth $10,000 More!
Of course, that's right.
Right???
Thinking every
penny you spend on a project will be returned when you sell the house is simply
not realistic. Often clients will tell
me they've replaced the roof, replaced the windows, replaced the hot water
heater, and replaced the heat and air.
Those things are
wonderful, and Realtors love to hear them.
They definitely make your home more appealing to both you and to a potential
buyer. And they are costly.
However, your
house already had a roof. And
windows, and hot water and heat and air. After all, they're a necessary part of the
structure. You could hardly sell a house
without a roof, right?
Replacing faulty
or outdated necessities is maintenance.
After all, you don't want a roof that leaks or a cold bath in the morning.
It's a lot like
fixing the brakes on your car: It has to
be done, but it doesn't necessarily make your car worth more money.
The one exception
could be replacing the windows, and we'll discuss more about that later.
In An Appraiser's World
If you plan to add
a pool, replace a roof, get new windows or completely remodel your kitchen,
it's good to know ahead of time just exactly how beneficial those items will be
when you decide to sell your house. A pool
costs many thousands of dollars, but exactly how much does it really contribute
to your bottom line when you sell?
When I decided to
write this blog, I consulted a local, well-respected appraiser on the
subject of home improvements. ( I call that "research")
I asked one question.
What adds to a
home's value, and what doesn't?
Or maybe that's
two questions…
As with all things
real estate, appraisal is a complicated business -- never more so than in the
last several years. I'm told that a new
roof does not exactly increase the
value of a home, but it can put your home in a different class when the
appraiser is pulling comparable sales to determine the market value. In other words, with your old roof, your
house might be compared to house A, which is older and in average
condition. With a new roof, your house
might be compared to house B, which is in above average condition.
It's not trading
the $10,000 you spent on a roof for $10,000 in market value, but it is
increasing your home's value by upping the category your house fits in. (Yes, my English teacher friends, I know I ended that sentence with a preposition.)
Also, if you completely
tear out your kitchen and remodel it, the appraiser is likely going to use
newer homes as comparable sales in your appraisal report. (Or, at the very least,
homes with newer kitchens.) Obviously, those
houses are going to be worth more than a house built in 1970 with the original
kitchen.
If your house has
been basically remodeled from the ground up, it will then be compared to newer
homes when determining value.
You get the drift.
Most remodels will up the ante a little bit, thereby making your market
value a bit higher.
Not a dollar for
dollar trade, but a definite increase in value.
But, We Have New Bathrooms!
And here, we're talking about remodels, not cosmetics. If you replace the tub, tile, sinks, counter tops and toilets in the bathroom and the kitchen cabinets, counter tops, appliances and flooring in the kitchen, you've added value.
If you replace a sink, or a tub surround, or a couple of faucets, you've made your home more attractive, but not necessarily more valuable.
According to a number of sources on the internet, the one home improvement project most likely to give you a sizeable return is replacing your windows. Not only do they improve the appearance of your home, they provide a much desired boost in energy efficiency.
You'll like that.
Buyers like that.
And, apparently, appraisers like that.
What About CURB Appeal?
There are three
areas where you should exercise caution when planning to upgrade your house;
landscaping, pools and shop buildings.
The appraiser -- who, after all, is the final decider about your home's
value -- is limited on how much they're allowed to add to the market price for
a pool. You could easily spend $40,000 adding
an in-ground pool to your home, and an appraiser might only be allowed to add
$5,000 for that improvement. The same
rule applies to shop buildings, patios and outdoor kitchens.
Don't
misunderstand me. I'm not advising against adding pools or shop
buildings. If you love swimming, add a
pool. If you love working on old cars or
refinishing furniture or sitting around with a group of guys smoking cigars and
telling fish stories, build that shop.
Just remember that you're building it for your benefit, not to add value to your property.
And that brings us
to landscaping.
Landscaping will
add tons of curb appeal and attract buyers, but be careful how much you spend
on it. Appraisers do not consider
landscaping in calculating the value of your home.
Is the Bottom Line the Bottom Line?
Let's face
it. Home improvement is exciting. It's fun to watch your home's transformation take place and satisfying to stand back
and admire the job you've done.
The key is to do the things you want to do. If you want a pool, have one. If you want an outdoor kitchen, enjoy it.
If you want a pink, heart-shaped jetted tub-for-two sitting in the middle of your master bedroom, give me a call first. We need to talk....
It's your
house, and the point is to enjoy it while you live there. You might sell it someday, but right now,
you're not selling. You're improving. Do the things that make you and your family happy and comfortable. Do the things that make a house a home.
Whether you're going to get
every penny back or not.
