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Six Ways to Ensure a Remodel Will Pay Off

By
Real Estate Agent with Century 21 Bell Real Estate

Lets face it; home improvement projects can put a dent in you wallet and now adays most projects make you feel like you're throwin gmoney to the wind.  Just a few years back you coul dcount on getting the bulk of your money back for almost all home-improvement projects; today not so much.  In a study conducted by Remodeling magazine, the average return on value for aan upgrade declined from 87% in 2005 to 64% in 2009.  So it is important that when you do decide to remodel, you do it in the best way to maximize your return on the investment.

Here are six rules provided by Money Magazine to make sure this happens:

  1. Repairs get the biggest returns.  Although a Jacuzzi and Sub-Zeros would be nice enhancements, your smartest money is going to needed maintenance.  If buyers discover problems during an inspection, it could cost you big-time.  Take the time and money to fix your house up now, rather than later.
  2. Remodeling beats adding on.  Large additions don't pay off.  For example, having a big, formal living room plus an everyday family room is less desirable than having one multi-use common space.  
  3. Eco-friendly upgrades can save cash.  Some green improvements will pay you back long before you actually sell your house.  By installing EnergyStar appliances and extra wall insulation, you'll see lower evergy bills every month.
  4. Tech infrastructure trumps cool gadgets.  According to Stephen Baker, president of industry analysis at NPD Group (a market research firm), home electronics seem like a deal, since prices have fallen about 50% over the past few years.  But that still doesn't change the fundamental problem with expensive built-in technology.  Today's hot gadget will be old news by tomorrow.  Buyers who are seeking an excuse to low-ball their offers aren't going to reward a seller for an out-of-date system.  Tech infrastructure is different; anytime you're opening up walls for a construction project, have cabeling and Ethernet ports isntalled.  This is a low cost that will provide capability for whatever technology may come our way.
  5. Let the Joneses be your guide.  Years back, you could be the first on your block to have a luxury kitchen, spa or pool and count on others following in your footsteps.  Today, you need to keep your home in line with those homes around you.  Also, keep your projects design-neutral so they will appeak to a large number of people.
  6. The new payback time is five years.  Keep in mind, the longer your time frame, the lower the risk.  If you're planning moving in less than three to five years, it's probably not a good idea to take on a big project.  But if you plan to stay awhile, don't delay starting a project.  Home improvements are a bargain right now and contractors are bidding 10%, 20%, even 40% lower for the same work than just a year or two ago.  Grab a contractor while they are hungry for jobs.
Home remodeling and upgrades are great when you do them the right way.  Minor repairs are necessary no matter how long you plan to stay in your home.  With the larger projects, be sure to keep caution that you will be able to gain some of your money back.

Comments (2)

Kathy Denworth
BHHS Keys Real Estate - Islamorada, FL
Realtor in the Florida Keys, Islamorada, Key Largo

The one benefit of remodeling and upgrades that people tend to forget is the enjoyment you derive from them. Sure, consider the future value, but heck, enjoy it now!

Mar 30, 2011 11:40 PM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Connie Great Post!  I am always amaze of some people that put to much money into remodeling and then get upset that they will not get the money back when it sells.

Mar 31, 2011 02:38 AM