VOL. 127 | NO. 116 | Thursday, June 14, 2012
Rays of Wisdom
Dana and Ray Brandon
Not All Home Improvements Equally Wise
By Ray and Dana Brandon
Ray’s Take As the housing market has cooled, the frequency of home renovations and upgrades has grown. While there is certainly nothing wrong with making improvements you can afford that will enhance your life, don’t expect them to add to the value or even the salability of your home in the future.
Typically, kitchen and bath improvements add the most to the value of your home, often returning between 65 and 80 percent of your costs. Of course, that depends on how you spent your money. High style or high-end appliances and materials are less likely to achieve that return, especially if they are not in keeping with other homes in your neighborhood. On the flip side, a shoddy renovation can actually decrease your home’s value.
Other improvements that can enhance your home and its value include installing a generous deck, which is seen as adding outdoor living space; or making the front of your house look fresh and inviting, which makes a good first impression on buyers.
Some of the worst improvements you can make – as far as recouping your money – are adding a swimming pool, investing in extensive landscaping, and converting a garage into an extra room. All of these are seen as drawbacks to many homebuyers: the pool represents both maintenance and liability; the landscaping is seen as a chore to preserve; and people actually value a garage more than an awkward add-on.
Ultimately, there are many things to consider before making the decision to remodel or add on to your home: how long you plan to live there afterward, the age of your home, and the value of nearby homes. Anytime you do decide to undertake a renovation project, be sure you get multiple estimates, check the references of all professionals you hire, and hold the appropriate permits. Otherwise, you could be in for some costly surprises when you eventually do decide to sell.
Dana’s Take Often homeowners ready to put their home on the market are encouraged to make extensive renovations to enhance salability. While this might make it easier for the real estate agent, it can also mean unnecessary expenses for the seller.
For example, one family was pushed to replace the carpet throughout their home. They finally gave in only to see the buyer immediately rip out the brand-new carpet and replace it with hardwood floors. Thousands of dollars went to waste – money this family sorely needed.
While removing clutter and keeping everything sparkling when selling a home is critical, making other changes could potentially make a difference to buyers or be a waste of money. After all, how do you know if your changes will suit a potential buyer’s taste?
So think carefully – or make changes when you still have time to enjoy them.
Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at email@example.com.