| 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.
Article continued at http://www.smartmoney.com/home/living/index.cfm?story=pay