Recently, I received an email to participate in next year's Home Remodelng Cost vs. Value survey. Today someone sent an article noting that the average return on value for an upgrade to a home declined from 87% in 2005 to 64% in 2009.
The good news is there are things you can do to ensure the best return on the expense of repairs or updgrades, and there is a difference.
Most buyers expect heat, AC, a dry basement and roof that doesn't leak. Replacing carpeting floors with hardwood is an upgrade and so is a kitchen or bath redo.
1. Repairs. Repairs are #1 on the list because buyers just don't want to mess with upgrading electric or plumbing or having to go through the hassle and expense of waterproofing a basement. This according to appraiser Jim Amorin.
That's why on the Matt Fetick Real Estate Team, we advocate a pre-list home inspection and either repairing deficiencies or pricing the house accordingly. It's always less expensive for a seller to take care of something ahead of time. This is especially true in our area where septic systems can be common.
2. Better to redo what you have that expand. Small is the new big and quality matters. Repurpose your space - using the basement or attic. My client Babette recently bought an adorable storybook cottage-style housein Wilmington, Delaware, and she's knocking out the wall between kitchen and dining room. Wala! An eat-in dining area. It gives the house a great open feel!
3. Green means cash. Energy-efficient features, such as EnergyStar appliances equal lower energy bills every month. With federal and often state tax credits that lasts through 2010, plus many local rebates and incentives, the work may pay for itself in just five years.
This is especially important with younger buyer who grew up with a heighten sensitivity towards reducing carbon footprints.
4: TechY alert! An inexpensive upgrade if you're in the midst of a reconstruction project is to add cabling and Ethernet ports for about $80 a room. That gives the buyer options for whatever technologies come along. It's a better idea than spending a wad on customized home theater equipment which can become outdated tomorrow.
5. Neighborly competition. "You really have to keep your house's amenities in line with the neighborhood," says Kermit Baker, director, remodeling futures program at Harvard's Center for Housing Studies. Find out if the neighbors added a pool or redid their kitchen. Watch that you don't overimprove however.
6. Look for ROI over the long haul. This means five years or more. No sense in spending $50,000 on redoing the kitchen if you are likely to be transferred in the next two years. With the shift in the market, now is the best time to get going on projects, as costs and labor are down. Iif you plan to stay awhile, don't delay starting a project.
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