Tuesday, August 18, 2015

Cool Spaces: 5 tips to weigh the best resale home improvements

Carpenter Nick Rossi, of Newton, Mass.
Carpenter Nick Rossi, of Newton, Mass. / Associated Press/Steven Senne

The cost of remodeling

Check out the Free Press’ graphic presentation online at on.freep.com/remodel showing the cost of various remodeling projects in metro Detroit and the percentage payback owners can expect in added value to their homes.
Homeowners are opening their wallets. A rebound in the housing market has made them more willing to invest in renovations that could boost the value of their homes even more in a rising market.
Spending on home remodeling has picked up over the past 18 months and is expected to rise nearly 20% to $151 billion by the fourth quarter, according to a report by the Joint Center for Housing Studies at Harvard University.
Those looking to sell should know that not all home improvement projects will boost the value of a home.
Here are five tips before investing in an improvement project: :

Don't overimprove

Some home improvements can help lift a home’s resale value, especially updates to features like cabinets and appliances that are dated. The key is to select finishes and appliances that a buyer might find in similarly priced homes in the area.
Consider a homeowner in a neighborhood with modest homes who splurges on pricey countertop finishes like quartz or marble. They’re not likely to recoup the cost when appraisers look at recent sales of comparable homes.
This applies to everything from lighting to flooring and bathroom fixtures.

Keep original footprint

A room addition that expands the size of a home beyond its original floor plan is least likely to produce a return on investment, says Richard Borges, president of the Appraisal Institute, a professional association of real estate appraisers.
Projects that require tearing down an exterior wall often involve moving doors, windows and other features, which can drive the costs higher.
The more expensive the project, the harder it can be to recover one’s costs.
Also, making major changes to the original structure runs other risks. “When you become the oddball, the only home in the neighborhood with four bedrooms, probably the fourth bedroom is not going to be that desirable,” says Borges.

Consider cost-to-value

Estimate how much of what you spend will be recovered at resale.
For example, if you spend a $1,000 on siding, and it only adds $500 to the resale value of your home, that upgrade is giving you a 50% return on your investment.
Graphic: Remodeling, what's it worth?
When home prices are rising fast enough, like during the last housing boom, it’s easier to recover costs spent on home improvements, regardless of the upgrade. The alternative scenario also holds true.

Prioritize repairs and curb appeal

If you need to upgrade your roof or fix window seals, do so. Those fixes may not be aesthetic upgrades, but often make a home easier to sell.
Replacing your front door might cost you $1,500, but it’s the type of upgrade that can make a home attractive to buyers, says Sal Alfano, editorial director of Remodeling magazine.
The magazine says replacing the front entry with a 20-gauge steel door is the upgrade from which homeowners can expect to recoup the most money among renovations that cost less than $5,000. The magazine estimates a recovery of 85.6 percent of the cost.

Consult an expert

Consult with a real estate agent or an appraiser who knows your market.
They should be able to gauge how the upgrade could affect the sales price of your home. That can help you determine how much of your investment you’re likely to recoup.
A consultation could cost between $500 and $1,000.
Real estate agents might be willing to offer their assessment for free.

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