[David Wluka is the 2006 President of the Massachusetts Association of Realtors and the owner of Wluka Real Estate in Sharon. This column appears on the June edition of The Alewife.]
by David Wluka
If you are interested in gaining a significant return on your home improvement costs, plan to add a bathroom or remodel your kitchen. But if you're like most people today, you may be more interested in a new home office, an entertainment center, or an in-ground swimming pool with all the accouterments of a luxury pool yard.
How can you know whether the money you spend on your home will actually improve your property’s value? And do you really care? Those are the two questions you should be able to answer before choosing which improvement projects to plan, according to our research at the Massachusetts Association of Realtors.
Research shows some home improvements are better than others in bringing a return on investment, and that some luxury additions actually can be a drag on the home's ability to sell.
An in-ground pool, for example, may be viewed by some as an asset, but families with infant children may see it as a safety problem, and seniors might shy away from the maintenance.
This $12,000-$15,000 investment will only add minimally to the value of your home, but if you are planning to stay awhile and enjoy backyard vacationing, this is still a good project for you. On the other hand, if you are planning to move in a few years and are looking for home improvement projects to smooth the sale, you might better consider adding an outdoor deck or new vinyl siding, which offers projected returns of value of 134 percent and 127 percent respectively.
Other projects which rank among the top five for adding to the resale value of your property include the remodeling of a bathroom – a $10,000-$15,000 investment – which offers a projected return of 129 percent; renovation of your kitchen – which might range from $45,000-$50,000 for a major remodeling project and upgrade in appliances to $15,000-$20,000 for smaller scale improvements – that will return from 105 to 118 percent respectively; and replacement of the roof, which typically allows homeowners to recover as much as 120-125 percent of the project’s cost.
Historically, family rooms have been a significant focal point of homes, but increasingly we spend less and less time there. As a result, recent studies have found that U.S. homeowners who add a family room recoup a more modest 85 percent of the project’s cost at the time of the home’s sale.
Other projects which show more moderate returns on investment include a sunroom addition of $30,000-$35,000; which yields a 70 percent average return locally; finishing off a basement, which typically yields an 83 percent return; and remodeling a room into a home office, which might cost upwards of $15,000 and should allow you to recoup an estimated 91 percent of the cost upon the sale of the home.
Remember, making your home more marketable and increasing its curb-appeal can be accomplished without a large investment. So, consider replacing worn carpeting and floor coverings, replace dated fixtures, and apply a clean coat of paint (in neutral colors) to give yourself the feel of a new home without a major investment.
If you plan to move within a year or two, it’s wise to limit yourself to relatively small touch-up projects you can do yourself or have done for little cost.
Cosmetic improvements will easily give your home a fresh look, add to its market value and create a favorable impression that will make it easier to sell.
If you are interested in more ambitious projects, however, like structural additions, you may want to consider the cost of design and construction, and then compare the return you might realize against the cost of buying a home that already has the amenities you desire.
These days the trend is nesting. Families are inclined to pursue improvements that complement leisure activities. This is a good reason to invest in your home, but do it because you will enjoy the results. If you are happy in your current home and have no desire to move, you can realize a return on your investment in the form of greater comfort and pleasure.
In the end, the market value of your home is determined mainly by the value of the homes around it, regardless of renovations.
If you are planning improvements designed to keep your home both comfortable and competitive, we at the Massachusetts Association of Realtors suggest you start with those remodeling projects which will bring the best return – renovation of the main bathroom or kitchen; as well as those jobs that must be done to maintain the integrity of the home’s structure, such as replacements of windows, siding and the roof.
But if significant rebuilding is the only way to get what you want, consider the cost of your home improvement projects and the potential return on investment, then ask a Realtor to show you some homes for sale with the desired amenities.
You may decide it makes more ‘cents’ to move.
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