5 Factors that Influence Resale Value And ROI
Neighborhood
Julianne and Kevin Warren spent $42,000 to remodel their 1950s ranch Resale Value home’s kitchen. The house was likely worth around $150,000 before that. The Forest Hills area of Grand Rapids, Michigan was their home, so they knew the improvements would be a good investment. “This neighborhood is very desirable for schools. Kevin says everyone wants to live in this area.
It’s even better that the Warrens own a home surrounded with properties valued at $200,000 or more. They have not priced themselves out in the local market, which is an important consideration when remodeling. Is it possible to make your house $300,000.00 if you live in a 100,000-home neighborhood? asks Israel Ramos, a real estate agent in Phoenix, Arizona.
Don’t exceed the maximum ceiling set by the neighborhood. Otherwise, you’ll lose your money. As your home’s price should be comparable to the value of your neighborhood, so should your home’s improvements. Kay Rigley, Seattle’s real estate agent, discovered recently that a client spent $90,000. to remodel two bathrooms. The bathrooms were fitted with heated floors, Italian tile, and included a shower. She said that she had told her client, “I wish you had talked with me first,” They spent more than half of a million dollars on the property and other improvements. Rigley estimates the home is worth $450,000.
Region
Many remodeling decisions will be affected by where you reside in the country. Remodeling’s annual survey shows that labor is cheaper in the South than it is in the Northeast. This is evident in the fact that the same master bedroom suite was priced at $59,401 in Louisville Kentucky and $73,814 Westchester New York.
Local factors can also impact demand. Every buyer will love a well-designed, modern family room. Fireplaces sell better in North than South, while decks have a higher value in warmer climates. While there are no hard and fast rules, keeping an eye out for local trends can help you ensure that your choices will be appealing to house-hunters.
Market
The real estate market is where regional differences really play a role. If there’s a lot of housing available, buyers will likely pay more for your renovations. Scott, a Bethesda contractor, recently quoted $300,000 for an extended kitchen, breakfast room and study. This was the most expensive renovation per square feet he’s ever done. They got their money back after they bought a bigger house last year. Scott observed that Washington, D.C. is very different from Missouri. “People get paid a lot of money to live here.”
But be cautious. It is possible to over-renovate in even a strong housing market. Brett Weinstein, a Oakland real estate broker, has seen the Bay Area’s housing boom firsthand. Although prices remain high, he said that “if someone paid $200,000 above the asking price lastyear, they bought when it was hot.” If they want to spend $60,000 to remodel their kitchen, they will need to live there for a while longer in order to get that money back.
Timeline
Weinstein points to the fact that the longer you stay in a house, the easier it is for you to recover your costs. Your investment will eventually be offset by an increase in property value, as home prices are rising at a rate of 5 percent per annum. Plus, you can enjoy the benefits of your renovations for many years. One caveat: Prices don’t necessarily have to rise by nature, so don’t be too dependent on the annual price increase. Keep in mind that life can throw curves and your house might need to be put on the market sooner or later than you anticipated.
Some projects can be hampered by time. Harvard’s Baker said that there is stylistic depreciation. “All the fads right now are for knocking down walls, making large rooms. In ten years, it might not be. As anyone who has ever seen avocado-green appliances installed in their dream homes can attest, bathrooms and kitchens can look dated.
Hidden Expenses, and Other Issues
You should be ready for unexpected expenses if you think the project will pay off. There are many hidden costs in home renovation. They include the additional costs incurred when the project is delayed or for heat-loss calculations and the expert’s fees to test for asbestos. Monthly interest payments for a loan for home equity. There may be higher property taxes to pay when your newly-improved house is reassessed.
Most experts recommend that home improvement not be considered an investment. It’s important to be smart about the amount you spend. However, a new deck doesn’t necessarily mean a mutual funds. Chasin, real estate agent, recommends that you do your research to determine what you want and what your finances can support. “I was able to find a listing that had the husband retiring early. His wife convinced him, and he bought a home office worth $50,000. Chasin says that the couple eventually moved to Florida. However, they didn’t get any money out of the home office. “But she didn’t care. It made him feel happy.
Project Payback
Remodeling magazine’s annual cost-versus worth analysis of residential remodeling projects has been ongoing since the mid-1980s. They surveyed appraisers and real estate agents from different areas to find out how much a project would cost and how much it might increase a house’s value one year later. It is widely considered to the best study on the subject. Jim Cory admits, however, that the survey is only a partial guide. He said, “We offer a benchmark with this study.” “Cases need to be determined on an individual basis.”
Additional Resource:
https://www.sleepingdogproperties.com/perspectives/difference-remodeling-renovating/
https://www.mymove.com/home-inspiration/trends/things-not-to-do-when-remodeling-your-home/
https://www.marvistadesignbuild.com/whole-home-remodeling
