Home rehabbers who are considering a move in the not-too-distant future should focus mostly on exterior upgrades. That's the message from REALTORS® who participated in Remodeling magazine's 26th annual "Cost vs. Value Report," done in cooperation with REALTOR® Magazine.
REALTORS® in 65 markets were given construction specs and costs on 29 upscale and mid-range projects and asked to estimate the percentage return at resale.
Of projects that saw national cost recovery rates of more than 80 percent in 2014, only one — a minor kitchen remodel, with 83 percent of cost recovered — was a strictly interior job. The others were an upscale siding replacement using fiber cement materials (88.1 percent), a wood deck addition (85.4 percent), mid-range vinyl siding replacement (83.2 percent), and upscale vinyl and mid-range wood window replacements (81 percent and 81.2 percent, respectively).
On most projects, the value of remodeling trended down in 2014 compared with 2013. No project exceeded an 88 percent return. The likely culprits for the year-to-year drop: rising remodeling costs and slowing home appreciation brought on by the lackluster housing market in many areas.
The story was somewhat different in the Pacific region, however, where REALTORS® estimated cost recovery of more than 100 percent for six projects: a wood deck addition, a minor kitchen remodel, fiber-cement siding replacement, wood window replacement, and an upscale wood and vinyl window replacement.
Nationally, projects at the bottom of the cost-recovery ladder included home office remodels (57 percent), installing a back-up power generator (58 percent), and adding a mid-range sun room (59.1 percent).
6 Rules to Follow for Home Improvement
Assess the Payoff:
Do the needed research to figure out if the work or project that you are considering will payoff when you sell your home. Our clients always check with us when considering a model or home improvement project to make sure they will get the most return at resale (even if they don't intend to sell soon).
Establish a Budget:
Know what you can spend and plan for the cost to go over by 10-20%. Consider speaking with a financing person if you will need additional funds.
Write Down the Details:
Outline the project and your expectations so you can makes sure the results will match your vision. This is key when getting bids ion the work so you know you are comparing apples to apples.
Get 3 Quotes:
Get 3 bids on the work to be done so you have a good idea of the cost and can choose the vendor who may not be the lowest cost, but who will get the job done right and on time.
Check out the Vendors:
Before you sign anything make sure the vendor you are planning to use has good references by calling them. Also, make sure you get copies of insurance and bonding if that is needed.
Get your Permits:
Before you start any work make sure you know if the work will need permits. A good vendor will help you with this or handle it for you.