Before you dump a ton of money fixing-up or remodeling your home, make sure that you are doing something that will add value… especially if your are doing improvements with the idea selling your home.
So how much will small renovations really add to the value of your home? Well, not too much really. And according to a USNews report, smaller remodeling projects like replacing siding, windows or doors actually prove to provide a better return on your investment than doing major projects like an addition or swimming pool.
According to Remodeling magazine’s annual Cost vs. Value Report for 2014, the top-ranking home improvement, that will add the same amount of value as the cost of the improvement, is replacing your front door. Replacing your front door adds 96.6 percent of the amount spent, to the value of your home.
But Steven Aaron, owner of the Steve Aaron Realtor Group at Keller Williams Beverly Hills and one of the protagonists of the HGTV series “Selling LA.” Says that “it has to be the right front door”. You could likely get away with just painting your existing door to obtain the same affect.
According to that Remodeling Magazine report, there’s a less chance that you will recoup your investment in a major remodel such as a kitchen or bathroom, than you are to get back what you spend on basic home maintenance. A good example of this would be adding or replacing siding. According to the study, siding replacement recouped 92.8 percent of its cost. The report does reveal that the only home improvement likely to return more at resale was a minor ($15,000 or so) kitchen remodel. A kitchen remodel could return nearly 93 percent. Returning 80 percent or more at resale, replacing roofs and windows were also high on the list.
Keep in mind that just because a project is expensive, doesn’t mean that it will add a considerable amount to the value of your home. Just because you spend $30,000 remodeling your kitchen, doesn’t mean that your house will automatically worth $30,000 more. In addition (no pun intended) you should make sure that your improvement is in line with your home’s current value, your immediate neighborhood and the local housing market. It doesn’t make sense to put in a pool if you are the only 1 bedroom home in the area.
Let’s take a look at a couple of home “improvements” that have the worst return on your investment…
Upscale Garage Addition
First let me say that for me, this would make an okay home my “dream home”! We’re not talking about putting some fancy cabinets in the existing garage, we’re looking at a totally new, detached garage. While I think this would appeal to women as well as men (because of the possibility of additional storage) a Remodeling magazine report says that the cost for this “high-end” projects averages around $82,000 but would only return about 70 percent of the investment.
While I think that if you have a 2 bedroom 1 bath home and add another bath, you would see a significant bump in value… especially if you have the only, or one of a few, 1 bath homes in your area. But the Remodeling magazine study is talking about a bathroom addition costing on average of $38,000. If the number of baths you currently have is the neighborhood norm, then the study expects to see no affect in the home’s value by adding an additional bath.
Adding a Pool
The National Association of Realtors’ National Center for Real Estate Research says an in-ground pool can add to a home’s resale price… but then again, likely not. An in-ground pool can cost anywhere from $25,000 to $50,000. The National Center for Real Estate Research says an in-ground pool can add about 8 percent to a home’s resale price. It makes sense to imagine that in warmer climates this percentage could be a little higher.
If you’re considering putting some money into a home improvement project keep a few things in mind. What you’ll receive back on your investment really depends on the value of your house, the value of houses in your immediate area, the housing market where you live, the quality of the project and how soon you sell after making improvements.