Renovations
Not all improvement projects will boost your home's value.
Some may cost you when it's time to sell. July 26, 2004: 11:44 AM EDT
By Sarah Max, CNN/Money senior writer BEND, Ore. (CNN/Money)
Before you spend a fortune fixing up your house, consider what future buyers are going to think about what you've done with the place. According to Remodeling Magazine's 2003 cost vs. value report, on average about 86 percent of renovation costs can be recouped in the sale price of a house. In other words, if you spend $20,000 on home improvements, your home's value should increase by an average of about $17,000. That's just an average, mind you. Depending on where you live, what you remodel, what you spend and the final result, you may be able to get back more than you put in. Then again, not all projects "pay for themselves." Some may actually be a strike against you when it's time to sell, said Hedy Weiss, an agent with Coldwell Banker in Franklin Lakes, N.J. Even open-minded buyers might have a hard time looking past the fact that you turned your front yard into a basketball court or slapped on an addition that doesn't blend with the rest of the house. "Most people who walk into a house aren't going to think about what they can do to make it work," said Marcia Previti, of Gillis Previti Architects in New York. "They just think it doesn't work."
Putting a chateau in shantytown
The real estate adage "buy the cheapest house in a nice neighborhood rather than the nicest house in a cheaper neighborhood" is key when it comes to renovations.
"Stick with the scale of the neighborhood," said Michael Litchfield, who is currently working on his third edition of "Renovation," to be published by Taunton Press in 2005. You may never recoupe what you spent if the houses around you are worth a fraction of the value, explained Litchfield.
"If you're in a neighborhood that has the possibility of changing, that's one thing," said Weiss. "In other areas, if you overexpand it's going to look.
Going against the norm
Chances are your renovation will be based on your household's specific needs (i.e. more space). Still, it's important to think through what 99 percent of the home buying population will want from a house.
Garage conversions, said Weiss, are usually not a good idea. Recently she closed on a house where the sellers had converted the garage into a workout room with heat, air, flooring, walls and mirrors. The buyers of the house placed an offer based on what it would cost to convert the space back to a garage.
"It's usually better to add onto the house or finish a basement than to change a garage into something else," she said. "Most people want a garage."
Similarly, homeowners sometimes think that because they never use a tub they should take it out and replace with a shower, said Previti. Or they base the height of countertops, cabinets or doorknobs on their own stature, making them too high or too low for the rest of the population, said Litchfield.
Pools, say real estate agents, are generally not a good investment because so many buyers consider them an ongoing expense and liability, say real estate agents.
Of course, in some areas a pool is considered as essential as any other part of the house. "We do a lot of work in the Hamptons," said Previti. "Out there it is all about having a pool."
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