Home Improvement

Last week I mentioned that Julie and I have a home that has hit the 10-year mark-which means that it’s officially no longer a “new” home by Frisco’s standards. We’re making some maintenance related repairs in addition to considering several updates.  I solicited feedback a few weeks ago and have received some great responses that I wanted to share.
 
Jeff Cheney of Keller Williams has some advice, as well as suggesting home owners reference available online resources, to help them understand the potential rate of return on various improvements.
 
According to HGTV, five improvements deliver the best returns:
 
*102%:  Minor Bathroom remodel which includes updating such things as replacing flooring, reglazing the tub, replacing fixtures/lighting and updating shower doors.
*100%:  Landscaping
*98.5%: Minor Kitchen remodel, which includes refacing/refinishing existing cabinetry and updating things like appliances, countertops, sink/faucet and wall finishing
*95.5%: Exterior improvements, including paint, siding and updating an entry
*93.5%: Attic space to bedroom conversion
 
One may ask that if you can’t get all your investment back, why bother to even make the updates? Similar to good home maintenance, buyers expect well priced homes not to need a ton of work. If the perception is that it will take hours to remove Aunt Nellie’s wallpaper, replace the shag carpet and refinish cabinetry buyers will be looking for a pricing discount commiserate with the effort and cost of updates.
 
Cheney offers words of caution to homeowners around what kind of return you can expect for your neighborhood. “Homeowners should keep in mind any home that is over-improved in relation to the surrounding homes is unlikely to yield a high rate of return. It’s important to note that if you have the most expensive home on the block, your investment will probably not return as much as the upgrading of a less expensive home nearby.”
 
This is right in line with last week’s article that discussed that highly specialized, and often costly, improvements will not always deliver a strong return. Instead, consider the price range and general features of homes in your neighborhood before making any significant updates. While you should certainly makes changes to fit your lifestyle and preferences, it’s always a good practice to take a hard look at what percentage of the money spent on these modifications you would see should you ever have to sell.
 
Next week, we’ll talk about what typically does give you the best return on investment and the rate of return you can generally expect.

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