Before you refinish the hardwood floors, add crown molding, a new deck, and new light fixtures you will want to read Cost Vs. Value. With home values still headed downward, many homeowners are not in a position to sell. In previous down cycles, people have taken the opportunity to upgrade their homes to make them more comfortable and prepare for a future sale. However, during this particularly tough time construction spending has declined; even though home improvement is still one of the most stable ways to invest your money. In Realtor Magazine’s recent article they offered a look at the cost vs. value for many common projects.
The results of their analysis revealed that the highest recovery of costs is from projects that produce ‘curb appeal.’ Curb Appeal is a term used to describe the exterior aesthetic of a home. There is actually a show by that name on HGTV dedicated to this idea. The reason this offers a higher recovery value is because this is the first thing potential buyers see. The yard or exterior of a home can actually be a deal breaker. Many buyers may not even make it through the front door if the exterior is not well maintained. If the exterior is not kept up, well the inside probably isn’t either.
The problem in today’s market is determining which projects are worth the money. While you may only technically recover 76% of the cost for a midrange kitchen remodel you gain salability. Buyers have thousands of options in today’s market. Homes must be the best price and in the best condition to be considered. If yours isn’t your neighbor’s home might be.
I would not recommend someone upside down on their mortgage and nearing foreclosure to proceed with such a task. However, if you are hoping to sell in the next five to ten years; it might be a good time to look into a few upgrades while you have the time and lower interest rates. The most important thing to consider is your market. Do Not Over Improve! If most of your neighbors have Formica and carpet and you upgrade to hardwood and granite you will be less likely to recover those costs.