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Granite countertops will add value to your home. So will a deck. Brushed-nickel fixtures won’t. Neither will wiring the den for Surround Sound.
Confused? You have plenty of company – namely a few million other homeowners.
“It’s extremely difficult for sellers to put a certain value on their house,” says Shirley Smith, broker-in-charge of the RealEstate.com brokerage in Charlotte, N.C. Real estate professionals, on the other hand, generally base the value on square footage and comparable sales of nearby homes with similar features, she says.
That’s not to say that nickel fixtures, Surround Sound wiring or a security system won’t attract some buyers, she says: “People might like that better, but that doesn’t mean it adds value.” In other words, you’re making your home more appealing, which is good, but you’re not adding features that allow you to increase the asking price.
Take a swimming pool – please. Although some buyers won’t even look at homes without pools, many more see themselves being drowned in upkeep costs. Swimming pools can even reduce the value of a home, especially if they’re in poor good condition. And Smith says satellite dishes are only attractive to buyers who specifically want a home with a dish.
Projects that add square footage generally add value. So do kitchen renovations; a major renovation adds the most value, but Smith says shiny new, upgraded appliances alone can add value. Bathroom upgrades and extras, especially in the master bath, also add value, Smith says. And guess what? Regular preventive maintenance also adds value to a home, she says.
But don’t overestimate the value added by home improvements. The bible on this topic is Remodeling magazine’s annual Cost vs. Value Report, which looks at the average cost of popular renovations and upgrades in 60 cities across the country and the return for the dollar on each.
The magazine notes that the return on investment varies from market to market, but it does break out national averages. In its 2006 report, Remodeling says that the cost of renovations has steadily increased nationwide, while the value added fell to 2002 levels. Basically, you’ll pay more for remodeling but get less back on resale these days.
It’s rare that a remodeling project returns 100 percent or more of the cost at resale, the magazine says – although it can happen in certain markets. In today’s more steady market, a typical project normally returns 75 percent to 80 percent on the dollar at resale, the report says.
Nationwide, on average, putting up vinyl siding is the most cost-effective renovation, returning 87 percent of the investment at resale. Major kitchen renovations, bathroom remodeling projects and replacement of wood windows are close behind, at 85 percent, according to the report.
The least cost-effective renovations at resale? Remodeling a home office, with a 63 percent return, and sunroom additions, at 66 percent.
Smith says it also makes a difference how long ago the renovation was completed. In general, you shouldn’t expect to get full value at resale three years later, she says.
Published on January 19, 2007Read full article at realestate.com