Home improvements made to your home shouldn't just be regular or preventative maintenance—instead, it should be about investing in the property's future value. So as with any investment, you want to ensure that you are getting the best ROI on what you put in. After all, if you're only increasing the value of your house equal to what you're spending, home improvement can be a profitless chore. On the flip side, however, a well-thought-out project can yield exponential profits—particularly if you're preparing your property for sale.
In this article, we'll take a look at a few key concepts that play a factor in determining the rates of return with improvements made to your property, including:
Remodeling Magazine study
Remodeling the kitchens and baths
Consulting a Professional Real Estate Lawyer CT.
If the roof of your property is leaking, buyers won't get beyond that. Details about your home that show that you've neglected regular home maintenance and cleaning can imply wider neglect in a property. This can ward off buyers who are on the fence or put you at a disadvantage when it comes to negotiating the price down due to concessions. Essentially, every homeowner should make it their priority to ensure that the existing structure is sound. While you may be tempted to invest thousands of dollars into an appeal kitchen or addition, a musty smell in the basement or signs of water damage can cripple your rate of return. Instead, telling potential buyers that you've updated the structure goes a long way to calming a buyer's mind when it comes to anticipating what may be wrong in the property (or, what they believe you may be concealing in the transaction).
The truth is that many homebuyers plan to remodel a home upon moving in, so investing in a custom kitchen can be a waste. In a study conducted with Harvard's Joint Center for Housing Studies and HanleyWood's Housing Continuum, more than 70% of buyers who purchased existing homes planned to remodel before even closing on a deal. Additionally, the same study showed that 30% to 40% of buyers of existing homes made significant home improvements within six months after purchasing the home.
According to Remodeling Magazine, home sellers are much less likely to recoup their investment in a major kitchen or bathroom remodeling projects than spending on basic home maintenance such as new siding. In their studies, Remodeling Magazine found that siding replacement recouped 92.8% of its cost. Roof replacements and windows were also featured high on the magazine's list, returning 80% or more in resale value.
Remodeling the Kitchens and Baths
Now, once you've taken care of basic maintenance, springing for a kitchen or bath remodel is a sure-fire investment, which can yield returns of more than 100% of the cost. To give you an idea of how much they can bring in, Remodeling Magazine's study has shown that:
A $9,400 bathroom remodel in Baltimore, Maryland recouped 182%of its cost at resale.
Larger markets, like those found in Washington, D.C., Minneapolis, Chicago, Atlanta, San Diego, and San Francisco also offered triple-digit returns on average for typical bathroom remodels.
For smaller cities, like Providence, R.I. and New Orleans, minor kitchen remodels with an average cost of just over $15,000 also provided returns of more than 100%.
To give you an idea of what you should improve when redoing your kitchen or bathroom, consider all-wood cabinets, commercial-looking modern appliances, natural wood or stone floors and stone countertops (particularly granite, which has been a trendy choice due to its durability and feel). Also, it pays to have more than one bathroom, especially if your home has more than two bedrooms—after all, no family wants to share one bathroom. According to a study conducted by Florida State University professors G. Stacy Sirmans and David Macpherson found that the addition of a new bathroom increased the sale price of a home by 8.7% (which was more than twice the rate for adding a bedroom in the study).
Your home's curb appeal is essential for bringing your home's value up at first sight. The truth is that if people drive by your house and aren't impressed, they're more than likely to pass on to a more attractive property. Estimates vary on how much curb appeal investments can bring to a property, but even just raising the interest level in your property is worth it alone. The reason for this is that you can weigh more offers and get an idea of how much people are willing to pay for a property—and common complaints. You may find that having curb appeal during an open-house can bring great feedback to suss out what needs to be upgraded before buyers are willing to pay more for a property. And while it may go without saying, make sure that your home's lawn and exterior is as pristine as possible. Presenting a home that screams "high maintenance" will ward off cost-conscious buyers.
A significant factor to consider is whether your plans for home improvement are in line with local codes. Undertaking a project only to find out that the "improvement" actually became a drain to your wallet as you scramble to bring things up to code is not a smart scenario. That's where consulting experts, like a qualified real estate lawyer ct., can give you the ability to plan realistic projects that are in your best financial interest. Considering that real estate attorneys regularly sense trends that homebuyers are interested in, it gives them insight that can mean more money in your bank account and smoother transactions.
Also, when investments are made to your project with outside contractors, it is essential to understand what your liability is should an accident occur or a contract dispute arises mid-project. Therefore, consulting with a legal professional when you're looking to improve your home or get it ready for sale should be high on your priority list to ensure the process is handled as smoothly as possible.