Improve but Don’t Over-improve
The message in today`s real estate market is clear: The days of remodeling for quick profit are over. Therefore you have to give careful consideration when you are putting money into your house. Will you recoup your investment when you sell? How much is too much to put into a house? Where should the dollars be spent and how should personal style be expressed without becoming a turn-off to others?
Do Not Over-personalize
As a homeowner, you need to consider the realities. If you expect to recover the full value of a $70,000 kitchen or a $30,000 master bathroom you are in for a shock. Today’s market has turned into a buyer’s bonanza. Even in historically strong real-estate markets a surplus of houses are sitting unsold. This despite prime locations and bountiful amenities – European-style kitchens, sybaritic bathrooms, landscaping to rival a botanical garden. In some cases, owners have crossed the line from what is sensible to what is over-improved. Not everyone wants a temperature controlled wine cellar or a theater-size media room. As a result, typical paybacks no longer materialize.
There are Still Good Reasons to Remodel
Number one reason to remodel: It is still less expensive than moving and also less disruptive to your life. Start by determining how long you plan to stay in your current home. You can then decide whether the disruption and expense make sense. Keep an eye on details and trends that will make future resale easier. Classy and simple are good guidelines to keep in mind. People don’t like to pay for things that aren’t their style or to pay to have them removed.
Consult the Experts
Once you decide to proceed on a significant remodeling project, you should consult with a real estate agent or professional appraiser. Always start from an informed valuation of your home in comparison with improved homes of the same size in your neighborhood.
In order not to price your home out of the market, determine a price cap by subtracting the price you paid to purchase your house from its remodeled value. For example, a $550,000 house in an area of improved $800,000 houses sets a ceiling on improvements of $250,000. If you spend more, you risk losing a higher payback, even in a healthy market.
Weigh Your Wants
After setting a budget, it is time to set priorities, by weighting the projects you must do, such as improving your household electrical system, against those you’d like to do such as adding a swimming pool.
As you compile your list, you should also balance your wants against those of a typical buyer moving into your area. In the event, that there is a move in your future, resale will be much easier if choices you have made are not too eccentric. A hidden wall safe and marble floors may not bring the level of payback of a heart-of-the-home functional kitchen or a vacation-at-home sunroom addition.
Opt for Quality
Good quality has universal appeal whether in cabinetry, appliances or fixtures but extravagance will not translate into a faster or higher payback. The most expensive imported kitchen cabinets and restaurant ranges and refrigerators are features that many buyers will not care enough about to pay for.
When it comes to overall layout, room arrangement should reflect the size of the house and typical living patterns. Most owners still want a minimum of three bedrooms and two bathrooms plus a power room. Converting a third bedroom into a dressing room could mean losing potential buyers in a family neighborhood. Yet in an urban market change might become an attraction.
Look for the “Hook”
When remodeling consider that something special, or what real estate agents refer to as a”hook” that can set your home apart. A garden room can sway buyers who may ignore some other negative such as being one bedroom shy.
When to Splurge
Of course resale is only one factor. The ultimate test of what type of house to buy and whether and how much to spend to remodel should come back to your personal enjoyment. If you have always longed for a pink marble bathroom, then you should splurge. What you need to remember is that the splurge may be one that comes without payback. A happy compromise would be a quality remodel that keeps all the immovable, parts neutral. Add the color you love with the accessories. Your goal is to express your personal pink creativity without forfeiting your hard-earned green money.