Whether you’re sprucing up your home because the lagging real estate market has left you no choice but to “stay put” for a few more years, or you’re simply ready to take your home’s appearance to a new level, making home improvements can be a great way to change the look, feel, and (hopefully, positive!) value of your dwelling.
But, not all home improvements are created equal, in price, or payoff. Here are four things to consider before you invest in home improvements.
Why are you doing it?
The more clearly you define your “end game” for home improvements and changes, the more strategic you can be with your priorities, materials, and budget.
Make a list of exactly what you hope to achieve in each project — and what elements about the current issue drive you crazy.
Are you feeling fed up with your kitchen? Why? Take time to explore and define what changes will actually address your problem, beyond surface “symptoms.”
For example, a kitchen can feel “dated” for any number of reasons, which may or may not include cabinetry, tile, paint color, appliances, lighting, countertops, furniture, and the overall layout.
Narrowing down exactly which points need to be addressed to produce the outcome you want can guide you in what must go, and what can be refreshed.
For example, older cabinets that are still functional can easily be improved with simple hardware changes or new paint; a simple fix that can ultimately save you thousands of dollars in materials, and labor.
According to Remodeling Magazine’s 2011-2012 Cost vs. Value Report the “minor kitchen remodel” is “the least expensive way to give an existing kitchen a complete facelift,” at a cost of just under $20,000 nationally.
Share your goals openly with vendors and contractors. Most home improvement experts will be happy to work with you to find creative solutions that will achieve the look you want within a reasonable budget.
What’s your neighborhood’s appeal?
Whether you live in a production-style neighborhood where homes tend to look similar, a swanky downtown high rise, or a unique historic neighborhood full of diversity, understanding the key aspects of your neighborhood that will attract potential buyers, may help you make decisions that increase the value your home.
For example, adding a second bathroom to your home when most of your neighbors only have one will typically make your home more attractive to future buyers.
On the other hand, expanding your master bathroom at the cost of losing valuable closet space, or a bedroom altogether, probably won’t be viewed as a benefit if you’re home is located in a family-oriented neighborhood where buyers expect to have several bedrooms.
How long will you stay?
If you know you plan to sell your home within the next five years, weigh the cost of your improvements and how much time and energy you’ll spend on them.
If you intend to hold onto your home for the long-haul, but will rent it out, keep in mind that tenants will not care for high-maintenance floors and finishes like a home owner will.
Choose improvements that will appeal to a mass market buyer and will be simple to fix if damage occurs.
How healthy is your local real estate market?
Some home improvements, like replacement doors, windows, siding, garage doors, and roofing are generally safe bets that add value and tend to pay off more than total remodels. This is due to both lower costs, and more immediate curb appeal, according to Remodel Magazine.
But, ultimately, the value of a home improvement is largely determined by real estate trends and current market demand at a given point in time.
Though the cost of home improvement projects skew high in Northern and Southern California, Seattle, Portland, and major Texas markets, for example, those expenses are “more than offset by the total value at resale,” according to Remodel’s Cost vs. Value data.
In short, if you live in a market that hasn’t shown signs of new life since the real estate bubble burst, even a traditionally “safe bet” improvement may not deliver value until the overall market conditions improve.
Am I Prepared for Unexpected Costs?
Remodeling Magazine’s 2011-2012 Cost vs. Value Report offers an analytical perspective on the average total job cost (based on estimates), compared to the return on investment (expressed through resale) for 35 common home improvement jobs in a variety of markets.
This report can be a valuable resource in determining what your home improvement project should cost.
Keep in mind, however, that final costs are dependent on a combination of factors, including the complexity of the work, existing condition of your home, the contractor you choose, materials, and potential risk of additional “findings.”
(You never know when that “minor” bathroom remodel will uncover a major issue that you hadn’t expected).
Allow a “cushion” of at least ten percent between the contractor’s estimate and the amount of money you have to pay for the work. (If your contractor’s estimate allows for a variance, you’ll need to boost your cushion even higher.
Stephanie Taylor Christensen is a former financial services marketer based in Columbus, OH. The founder of Wellness On Less, she also writes on small business, consumer interest, wellness, career and personal finance topics.