Which Home Improvements Pay Off?

Generally speaking, there are two ways to go about making home improvements. Either you splurge for something purely for the sybaritic pleasure of having it — the Italian marble bathroom you've dreamed about; that skylight that your spouse has been hinting at for the last six years — or you take a pragmatic approach, buying an energy-efficient furnace or repairing a leaky roof because you want to increase your home's market value.

Don't expect to score on both counts. "Just because you pour $20,000 into your home doesn't mean that your house is worth $20,000 more," says Frank Dell'Accio, a real-estate broker in Lindenhurst, N.Y. "I had a guy who invested $100,000 in a $130,000 home after he lived there for four years. He put it on the market at $225,000. He was offered $170,000." His mistake: spending money on amenities that were only peripheral to the value of the house. "He wanted phones in the bathroom," says Dell'Accio, "but [who else is] going to pay for them?"

Exactly how much you'll recoup in costs depends on several factors, including the direction of the broader housing market, the value of the homes in your neighborhood, when you plan to sell the home and the nature of the project itself, explains Jim Cory, senior editor of Remodeling magazine. In the hottest housing markets, you could indeed earn more than your investment back on a remodeling project. A new deck in Boston, for example, recoups 139% of its costs, according to Remodeling magazine's latest survey (which assesses the cost recouped should the house be sold within one year of project completion). But you shouldn't count on those types of returns. In Baltimore, the same project is likely to only recoup 57% of its costs.

And keep in mind that the longer you hold on to your home after a remodeling project is completed, the less likely you are to recoup its value. That's in part because design tastes can shift significantly over time. Remember when avocado green was all the rage? Also, there's little reward for having the fanciest house on the block, warns certified financial planner Dee Lee of Harvard, Mass. A house that's priced higher than its neighboring homes could be perceived as overpriced — even if it does have more value.

This section examines a few improvements that pay off more often than not — and some that rarely make a difference when it comes time to sell your home.


If you're planning to sell your home in a year or two, a fresh coat of paint could make the sale significantly easier. "People don't like buying other people's problems," says Rhode Island broker William Eccleston, "and a coat of paint can cover a lot of problems." Professionally painting the exterior of a two-story wood-sided house costs an average of $8,336 and recoups 74% of its cost, according to Remodeling magazine. "A clean, neat, orderly, fresh coat of paint, that's what sells," says New Jersey broker Steve Krawse.

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