When I am out doing appraisals or consulting a homeowner at a listing appointment, I often get asked what kinds of home improvements add value. They will ask me if I think it makes financial sense to add a particular feature to their house. Here are my thoughts on some of the common questions I receive.
First of all, the best way to increase the value your home is to make any needed repairs or fix a problem in your house. For every dollar you spent repairing or fixing a problem, you will receive 3 to 5 dollars in return. Now that’s a return on investment!!!! As an example, lets say your roof is older, and needs replacing. Do you realize that most potential buyers will discount their offer on your home by MORE than the cost of repairs to account for the risk, time and inconvenience associated with having to complete the roof themselves? If a roof will cost $5,000 to replace, a buyer will discount their offer price by $10,000 or more. Therefore, isn’t it common sense that by you “investing” $5,000 in your house, you will get a return of $10,000 on that investment? This is the case for most items that need replacement such as heating system, septic system etc. If your house needs painting and it will cost you $6,000, be happy to know that after painting the house, you will get ALL the money back and more. So the #1 rule is…. Fix what is defective, broken, funky or creates a problem.
After everything is fixed, what kind of features add the most value? A deck, a finished attic, a garage? I will list a some of the items that I feel add the most. Before, I do that, I do want to make this point. If you are going to live in your home for years and are thinking of adding something major (ie. Porch, addition etc) and enjoy it for 10 years, isn’t it safe to say you got “value of out it”. Having said that, here are Jack Lavoie’s “resale value enhancers” (Editorial here. I don’t care about the myths and practices of most appraisers and bank guidelines. I base my opinion on 20 years of experience valuing homes in the Greater Manchester and Southern New Hampshire areas).
Minor Kitchen Makeover - If the cabinets are solid and modern, keep them. If they are solid, but dingy, then paint them. Replace countertops, add a nice big sink and attractive faucets and install new appliances. Tile in the kitchen gives an average kitchen an expensive look
Adding a 3rd Bedroom - If your home has less than three bedrooms, adding a bedroom will add significant value.
Adding a finished basement- Finishing the basement is the most inexpensive way to add living space (hey, the walls, floor and ceiling is already there…lol). Compare that to having to build an addition. Sometimes adding a family room in the basement can really change the functionality of the home.
Adding a 2nd bath - If your house is a 2-story home and has only one bath, then adding a bath will greatly enhance the value. If you have an upscale home, adding a master bath with increase value.
Of course, the actual impact of these or other improvements will vary on each house. If you would like an unbiased opinion or analysis of your proposed improvements, don’t hesitate to contact me.
Last point... Never OVERIMPROVE the property. That means, don't add features that are excessive the neighborhood.
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