Home Improvements
HOME REPAIRS TO BOOST VALUE
There are home repairs that improve value and there are home repairs that probably will not help to improve value. Not all home repairs are created equal. If you are planning to do any improvements in order to increase your potential selling price, do your homework. Talk with an experienced real estate agent or a builder to learn what you should consider doing that would really enhance your home’s value. The National Association of Realtors publishes an annual report entitled Remodeling Cost vs Value from the Remodeling Magazine. You can get the report by going online to www.costvsvalue.com. This report features various home project costs and their returns by region and with a national summary.
The neighborhood you live in and the current condition of the real estate market will make a difference as to what repairs to do and how much money to invest in those repairs or improvements. You can over invest in remodeling if your improvements make your home the most expensive in the neighborhood. It is difficult to sell a home if the asking price is far above the average value of other homes around you. If you make your home significantly larger or more expensive than others in the neighborhood, the likelihood of recovering your investment declines.
Most reports conclude that the best return on improvements and ones that buyers are most willing to pay for are:
- adding or remodeling a bathroom
- remodeling a kitchen (appliances, cabinets, floors)
- landscaping
- adding a room
- adding a garage
Because painting and landscaping are primarily labor intensive, they seem to bring the most bang for the buck. Painting the interior and exterior and beautifying your lawn and flowerbeds make great first impressions. If you are on a tight budget, these will definitely improve value while not costing a great deal.
There are improvements that could take the value down. Some homeowners have thought that converting a garage to a family room or another bedroom would improve value. While that may meet the homeowner’s immediate need, it will usually be at odds with the needs of a prospective buyer. In the mind of the buyer you have eliminated the garage. Sunrooms, home offices and swimming pools may also be great features for the seller, but they bring little if any return on investment.
In the Remodeling Cost vs Value Report for 2008, replacing a roof, the siding, or windows (vinyl) provide a good return on investment. If your home needs any of these repairs you would be wise to get them done before putting the house on the market. Most buyers shy away from wanting to do these things and usually over estimate the cost of doing them. In a buyer’s market there are too many homes available that don’t need these repairs.
A good assumption is that most buyers don’t want to paint or repair items that need fixing. They want the home to be in “turn key” condition and have everything completed. If you have done the right improvements and dressed up the home properly, it will help to sell your home. If you don’t do the necessary improvements, the buyers will mentally add up the costs of repairs and deduct it from their offering price (usually over estimating the costs).
There are also improvements for which you may obtain energy tax credits. Please consult your tax accountant before expending any money. The IRS states: “Individuals can make energy-conscious purchases that will provide tax benefits when filling out their tax returns next year. The new law provides tax credits for making your principle residence, which must be in the United States, more energy efficient and for buying certain energy efficient items.”
Some examples of home improvements that could qualify for tax credits are:
- exterior doors and windows
- skylights
- insulation
- geothermal heat pumps
- central air conditioning/heating
- asphalt roofs with cooling granules
The qualifying years and dollar limits should be discussed with your accountant. Many of those mentioned items will also improve your home’s value.