As a living space, our homes' design and condition affect our lives daily. As an investment, its value in the marketplace is something we seek to preserve and enhance. When considering home repairs and improvement projects, we must consider both the benefits the job will add to our daily lives and the amount of resale value the job is likely to add, as well.
Maintenance, and Remodeling
For basic home repairs and maintenance that are needed around the home, your decision is relatively simple. In general, a well-maintained home yields better day-to-day service and provides long-term financial returns. Home repairs are best taken care of as soon as they are noticed: problems are solved while still small, and the home remains a safe and comfortable place in which to live.
Decisions to undertake renovations, remodeling, or other major home improvements are more complex. The best starting point is your own desire. How much more do you think you will enjoy your home if you go ahead with the project? If you are planning to stay in the house ten years or more, most of your decision should be based on how much the enhancements will improve your lifestyle. If your expected length of stay in the house is shorter than ten years or is quite uncertain, or if the contemplated project is quite large, you need to pay more attention to the improvement's impact on probable resale value.
Every home market is different, but you probably know quite a bit about your market simply because you live there. With that knowledge and an understanding of the Five D's (Distance, Deficiency, Distinctiveness, Demand, and Degree) you should be in a position to sort out the advice you'll get from contractors, neighbors, magazines, and family members.
Resale Value from
Distance encompasses the issue of how good the property looks from the street, before people get out of their cars to take a closer look. There are thousands of houses from which prospective home-buyers can choose. If they don't have any interest at first glance, they may not come in and find out that the home is just right for them! Some people call this aspect "curb appeal." Things that make your home more attractive from a distance generally have a high rate of return. Landscaping, the front entrance, and the condition of the paint or siding are the biggest factors in curb appeal. Good landscaping does not require anything particularly elaborate, but if you want to increase resale value, most homes will need a touch up here and there.
The front entrance can be a big draw and seems to play a large role in curb appeal. The door should be in great shape and have a fresh coat of paint. New hardware can also upgrade its appearance. If the houses on your street look alike, it might be worth adding more elaborate door trim, flanking windows, or a sharp-looking stoop or porch. The front walk and steps should also be in good repair, as should the house paint or siding.
Home Repairs to
Deficiency refers to whether or not your house is flawed in some basic way, and often defines how your home compares to nearby homes. If you have one bath and everyone else has three, adding a bath is likely to have a relatively high return. Obvious deficiencies will usually reduce the value of your home substantially. Deficiencies like no air conditioning, an old, battered roof, or a wet basement get noticed right away and prospective buyers tend to lower their offering prices by an amount greater than the actual cost of the remedy. Resale value is strongly linked to how many of these deficiencies you can mend before showing the house.
Home Repairs to
Distinctiveness is the one thing most people like to talk about. It's what you and your realtor talk about when you describe the house to others. Homes generally sell better if they have two or three special or distinctive features. Things like a walk-in closet, a whirlpool bath, a nice fireplace, or a grand foyer can separate your home from the crowd and stir interest in buyers. These special features become very important in a competitive market where a lot of similar homes are for sale.
Remodels that are
While the special features that make up distinctiveness are important, they are of no help and can even lower the value if they are not features widely in demand. You may think a whirlpool in the living room will give your home a terrifically distinctive character, but prospective buyers might not agree. Anything zany or out of character with the neighborhood should be avoided. An ornate fireplace with a sculpted marble mantel may add plenty of value in an upscale neighborhood, but the same fireplace may be seen as difficult to clean and energy inefficient in a working-class neighborhood. Limit improvements to those for which there is well-documented demand and look at new model homes to verify that features you're considering adding are present in those homes.
How Degree Affects Resale Value
Degree is the final D. No matter what you do, don't overdo it. If the front entrance is quite attractive already, doing it over in a new color will rarely be worth the cost. Whether enhancing how your home looks from a distance, adding distinctiveness, or addressing deficiencies, one can usually get a fairly high rate of return up to some point. After that point is reached, the rate of return drops off markedly. If your house is the only one on the street with only one bath, spending $4,000 to add a new bath might yield a return of $6,000 to $8,000 in terms of resale value. However, adding a bath that costs $15,000 may also yield an increased value of only $6,000 to $8,000. If the house already has a number of special features, each added one is likely to have a smaller impact on resale value.
Content courtesy of http://www.homeadvisor.com
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