Monday, November 5, 2012

Remodel Now, Reap Rewards Later

Moving on Monday

When selling your house, the question usually arises--should I invest money in remodeling my home for a higher selling price, or leave it as is and take whatever offer I get?

This is never an easy answer because of the many variables.  When do you plan to move?  Do you want to enjoy the upgrades yourself before selling?  How fluid is your cash?  Can you afford to lose 50-60% on a project you undertake?  Would the house benefit greatly from the improvement even if you don’t get 90% back on the investment?

Answer these questions honestly before starting a project.

Should you go overboard and start putting in high-end appliances and granite countertops if you can afford it?  Or scale back and replace door fronts instead of all new cabinets?  

Before undertaking any remodeling project, consult with a real estate agent as to the return on investment you can expect.  If a $25,000 kitchen make-over will only net you 60% return, is it worth it?  Especially if a $5000 investment might net you 110%?  

According to Remodeling magazine’s recent study of the cost of various home improvement projects versus their resale value, some of the biggest bang for your buck is in the smaller projects.  For example, a new garage door can greatly improve a home’s exterior.  This is important when potential buyers are driving by to determine if they want to see more.  An average $1878 cost of a door yields a 62% return.  Vinyl siding can yield a 64% return.  However, a $54,000 bathroom addition added only about 42% of the value to the selling price.  

That isn’t to say you shouldn’t do any remodels.  If you will be in the house for a while, you can certainly enjoy the new spa bathroom.  But be prepared to eat 60% of what you laid out when the house hits the market. 

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