Home Improvements That Pay

There are two schools of thought when it comes to home improvements. One is to do them for your enjoyment, the other is to improve your home’s market value.

How much you can expect to recoup on your investment depends on many factors, including the neighborhood, the type of improvement, the housing market, and when you sell. And the longer the time period after remodeling, the less you can expect it to affect the value of the home.

A kitchen remodel can make the biggest impact. Paint, wallpaper, flooring, and new countertops and appliances make your kitchen pop to the potential buyer. Even replacing the old cabinet hardware with new versions can make a big difference. A complete kitchen remodel can recoup up to 90 percent of its cost, a minor improvement from 94-100 percent.

Adding a new heating or air conditioning system brings a huge return – up to 100 percent for heating and 75 percent for air conditioning. The next most popular addition is an extra bathroom. Even at a cost of $5,000-$12,000, you may recoup up to 92 percent of your costs.

A deck may be the most cost-effective way to add space to your home, followed by a family room. Each can bring a modest 75-85 percent return.

Remodeling magazine publishes a yearly “Cost vs. Value” study aimed at remodeling contractors. Their best recommendation for the highest return? Minor kitchen remodels. “In higher-end real estate areas…if you revamp cabinets, change appliances, and recover your floors, you’re likely to get your money back – and then some. “ Bath and major kitchen remodels come in a close second.

Items that may not bring a high return include a home office, window replacements, and adding a pool.

Any improvements that bring added curb appeal will help your home sell more quickly. For example, a fresh coat of exterior paint or new siding will make your home more appealing to buyers, and may bring a higher price.

--Larry Perkins, Dominion First Realty Newsletter (April, 2003)

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