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Don’t Expect a Dollar for Dollar Return

September 10, 2009
By
AFTER

AFTER

I’m pretty sure all my clients knows this, but for some reason many of them do not think it applies to their home. Just because you put $20,000 into a new kitchen, it doesn’t mean that your house is now worth $20,000 more. There is rarely a dollar for dollar increase in the value of a home for work done. In most cases, the best you can expect out of a renovation/remodeling project is 80% of what you spent, and that really depends on what neighborhood, city, and/or state you live in. And that number is extremely optimistic.

BEFORE

BEFORE

So if you’re considering doing some updates to your home, keep in mind the reason why you are doing the updates. Are you updating to sell the home? Or are you updating because you want to enjoy the new, modern look and amenities? If you’re updating to sell, cost is more important than ever. Obviously, you don’t want to give your hard earned money away, and that’s exactly what you will be doing if you buy top of the line. You want to spend on your updates so that the home sparkles for the buyers when they first walk in, but also doesn’t say “cheap remodel”. On the other hand, if you are remodeling to enjoy it, then go for it. But remember that when you go to sell, you’re not getting all that money back.

Often people put upgrades in their home that force them to overprice their home for the neighborhood. If you live in a neighborhood where every home has laminate countertops and standard cabinetry, and you put in granite and custom cabinets, the price of your home may not increase at all (you have to get past the appraiser). The advantage you have is in salability. The buyer will more likely choose your home over other listings because of those high end updates. So your upgrades may not increase your home’s value, but they may make for a quicker sale, and that right there can easily translate in to dollars.

If you’ve decided that you need to make some updates to prepare you home for sale, you should focus on two areas first: the kitchen and bathrooms. This does not mean that you should neglect the rest of your home. You still need to do a deep cleaning, re-paint or touch-up certain areas, and repair the trim work. But if you are planning to go all out, you’ll get more of your money back on kitchen and bath remodels. However, if your home needs new windows and has rotting siding, you are going to have to give those attention because when it comes time for the inspection those issues are going to come up.

Ultimately, it goes back to one of my previous posts where I stated that it is expensive to sell your home. Not only do you need to do a heavy cleaning and decluttering, but you may need to do some expensive updates or repairs. And then there is the exterior and the all so necessary curb appeal. Try and put your money where it will provide you with the best return. I regularly enoucourage my sellers to starting with the exterior because that is what the buyer sees first when they come to look at your house. Next focus on the entry because again it is the first impression of the interior of your home. And if you feel like you must do a major remodel or update, save that for step two. You may find that with a few simple touch-ups, a remodel isn’t needed and save yourself a ton of money.

Have you ever done any remodeling or major fixes before listing your home for sale? What special tricks have you used to make your home sparkle without spending a lot of money? Please share your successes and failures.

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