Thursday, August 28, 2014

Thrifty Thinking: The Impact of Home Improvements and the Resale of Your Home

Today we price our home based on size of home or square footage, number of rooms, size of acreage if any and location.  A house with specific finishes and specific updates is a bonus and fits well in specific neighborhoods but does adding specific updates to a home actually improve the value of a home and can you recoup the money invested in the home improvement project.
Some home improvements can help you sell your homes faster because the updates are current and new giving new homeowners the option to buy a home without having to make the investment in home improvements.  The new home buyers can make use of what money they have after buying a home to decorate and personalize their new home.
As a seller there are some home improvement projects that do provide higher returns than others.  Here are a few home improvement projects that have returns on money invested.
Front Doors
Replacing an entry door can actually drive the most amount of return on your investment at 96.6% according to the Remodeling Cost Value Index.  This is not surprising as your front door has a direct impact on curb appeal.  When new buyers enter via a beautiful door, they gain the confidence that what is inside is as beautiful as this new door.  Front doors are also relatively affordable to replace with a cost between $400 - $1,000. 
Garage Door
Garage doors are similar to front doors as they can make the difference in the way your home appeals from the street. Garage doors are also relatively affordable in that a door could cost between $700 - $1500 with roughly an 84% return on your investment. 
Adding Space
Investing in more space in your home like converting an attic into a room or making a basement functional or even adding more rooms to your existing home can give your more value to your home. However that value might be in being able to meet market needs.  If your neighborhood’s average home has four bedrooms and your home has three bedrooms, adding another room could be the difference whether your home will sell for similar prices to your neighbor’s homes or whether your home will be considered in the initial viewing process by buyers. Adding space can actually become a simple project by managing the basics like framing, insulation, walls, and flooring without adding a lot of extras.
Structural Updates
Updating windows and roofs are great for resale because you may be asked to update these prior to selling by buyers, adding the project to your list of things to do.  Or buyers may ask to reduce the cost of the home by the costs of these structural updates so that they have the money to replace these items.  Without a strong foundation and good home structure, the home’s core value may go down.   Decorating or design projects can add value esthetically to a home but without the proper structure, the roof will leak and ruin walls and that brand new kitchen you remodeled or the windows are single pane and old and may let in so much wind and air that your electric bill has increased because of the inefficiency of the windows.  These can be fairly expensive projects but if you add these to your overall budget, you can also use these types of projects as opportunities to sell the recent updates and maintenance on the home which results in confident homebuyers.
Kitchen and Bath Remodels
Great kitchens and baths can be the rooms that can close the deal when selling your home.  Updated kitchens are rooms that are used for entertaining and gathering and have families spending a lot of times in these rooms.  Conducting a high end update to kitchen and expecting to get your full money back from these projects should not be the goal of updating a kitchen.  The same holds true with bathrooms.  These projects may help your home sell faster than others because of these updates. But you can update your kitchens and bathrooms with minor and lower end products to meet the same goal.  This will help manage your money and also help sell your home faster if that is your goal.
Adding updates to a home can help with the value of your home but it is not a guarantee to increase your home’s value.  Other conditions are to be considered like is your home in a hot market, what does the inventory of homes look like in your market, is your neighborhood a premier neighborhood,  what have been the overall updates to your home since it was originally built, how has your home been maintained and can you document the maintenance, does your home extra amenities like unique backyards and are you close to parks, schools, etc.  
Elizabeth Dodson is the co-founder of HomeZada, a cloud-based home improvement and organizational software tool. HomeZada strives to educate and provide resources for homeowners in all areas of home management, including home improvement projects, maintenance, inventory, property information, and property value.

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