7 Home Rehab Projects
that (Might) Improve Value
Down the
road from my house is a major intersection. For years, this intersection has been a traffic bottleneck that creates a daily ritual of pain for thousands of drivers who have to traverse it. At rush hour, the traffic
gets backed up for half a mile in every direction. One might say, "The bottleneck creates a pain in the neck." (Or one might not if they didn't want to sound silly. But I gave up on that a long time ago.)
The city went about finding a
solution in a systematic manner. They studied, collected data, and determined the best cost-to-value solution. The city decided that the most practical and most cost-effective means of improving the situation was
to build on overpass.
But what if the city had not
studied, come up with models, and made a plan? What if they would have jumped in and started digging up the street in the blind hope that it would make traffic better? (I'm pretty sure Boston did that with the
Big Dig didn't they?) It would have
been a disaster. It would have cost too much money and wouldn't have solved the problem.
Too often, home owners make
that mistake when they plan a rehab, remodel, or home addition. Maybe they want to expand the kitchen, finish the basement, add a sunroom, build a deck, or replace all the windows. Unfortunately, they don't
consider whether the improvements they are considering will add value to the home. They just launch into an unplanned project to fix things up. The results could be disastrous and costly.
There are two questions that
should be asked before every home improvement project. The first question every homeowner needs to ask is, "Will this improvement add value to my house?" The second question is, "How much value will
the improvement add?"
In an effort to help with that
planning, here are 7 improvements that are most likely to increase a home's value as determined by outside studies and my personal experience as an appraiser.
So here they are in reverse
order. (Don't you just love countdown shows?)
7. Replace the windows.
New windows can cost about $10,000 and are likely to return about 70% of their cost to the value of the home. An added benefit is that energy costs go down when older windows are replaced with newer,
energy-efficient models.
6. Replace and/or paint the
siding. Anything a homeowner does to improve curb appeal is a really good idea. If a house looks good, it's easier to sell and appraise. A good impression goes a long way. The same advice applies to lawns and
landscaping.
5. Finish the basement.
The reason this is so low on the list is the high overall cost to complete the improvement. It can cost between $20,000 and $50,000 to finish a basement. The value added to the house will only be about 65% of the
value. If a homeowner is planning on living in a house for a while and needs the extra space, a basement can be a good idea. However, if they are fixing up the house to move, I would just skip it.
4. Remodel the kitchen.
People spend a lot of time in kitchens. They are very important to the life of a house. The nicer a kitchen feels, the nicer a house feels. A homeowner will receive about a 60% return on the cost of the kitchen
remodel to be added to the value of the house.
3. Add or rebuild a deck.
BBQ. 'Nuff said.
2. Remodel or add a bathroom.
Same reason as the kitchen, only homeowners spend even more time here. And bathrooms cost less than kitchens. I don't think you can put a number on the value of a nice bathroom, but the stats say around 70%
return-on-cost. Adding a full bath can add a lot to the value of a house too.
1. Add a fireplace.
Studies show that a fireplace can add 12% to the value of a home. People love fireplaces. They are comforting and homey and worth the investment.
BOTTOM LINE: Every home and
every neighborhood is different. A one-size-fits all solution might not work. Sometimes it takes an expert like a real estate agent or an appraiser to analyze all of the value and cost factors. If a homeowner
is planning a major improvement, it would be best if that person hired an appraiser to help determine the best, most cost efficient, and most valuable solution. The homeowner might spend a bit of money up front,
but they could save themselves a major pain in the neck in the end.
BONUS PROJECT: This one might be obvious (so much so that I didn't think to add it until I had already completed this list), but the best and cheapest way to improve the value of a house is paint the
inside and clean and/or replace the carpets. Real wood and tile flooring are also great. This project doesn't cost much and can create a huge impression. When I see a house that looks neat, clean, and new, I
look for upper-end comparables in order to better appraise the value of the house. |
