Are homeowners at risk of over-investing in their home? It’s a question every homeowner should consider before they start a big remodeling or home improvement project, whether they’re selling soon or not. The tough part is that everyone’s situation is different, there’s no universal formula to determine how much is too much.
With so much at stake, Angie’s List has put together a list of questions homeowners should ask themselves before getting into the grit and grim of remodeling:
• Is the remodeling project to get your home ready to sell or improve your family’s living space? If it’s to improve the living space for your family, and you’re planning to stay in the house for several more years, it’s probably worth spending a little to achieve what you want.
• Are you planning to sell soon? If you’re planning to move within the next few months or year, big-dollar projects may not be a good idea. You stand less a chance of recouping your investment.
• What is the typical resale price of homes in your neighborhood? Return depends on what’s typical for your neighborhood. With a little research, you can see what the average sale price is for homes in your area and determine what your “ceiling” is for investment.
• What features do typical homes in your neighborhood offer? If your home only has one bathroom, but all your neighbors have two, adding a second bath may be a good idea.
• How much can you afford to spend? This again speaks to the personal nature of the decision, and is impacted by whether you’re planning to sell or stay in the house. If you’re planning to stay for a while, you may consider breaking the project into phases so you can spread the cost out over a few years.
Here are a few additional things to keep in mind when it comes to your remodeling project:
• Because there are many variables that affect the housing market, you shouldn’t expect to get a dollar-for-dollar return on a project. A $20,000 kitchen remodel doesn’t necessarily mean you’ll get $20,000 more for your home.
• Converting existing space into usable space, like an attic into a bedroom, finishing a basement or adding a deck, will bring a better return than adding actual square footage in the way of a new family room. The upfront costs aren’t nearly as exorbitant.
• The amount of return is directly proportional to the grade of materials. When finishing a basement, for instance, wall-to-wall carpeting and drywall will bring a lot more than cheap paneling and a drop in ceiling.
• Kitchens and baths are a good area to focus on if you are going to be in your house at least five more years. These are the more costly remodeling projects, but you’ll be living in the home long enough to enjoy the upgrades and are more likely to recoup the investment.
• Behind the scenes improvements that increase the house’s integrity, such as a new roof, won’t garner the kind of return that homeowners might expect. Buyers expect these things to be in good shape on a home.
• A common remodeling mistake is a pool. The majority of the market rejects this because of the maintenance requirements and safety issues for children. Exception: If your home is the only one on the block that doesn’t have one, it could be a factor when it comes time to sell.
Don’t sink big dollars into extra landscaping. Simple is best. Add some mulch and brightly- colored flowers, don’t drop several hundred dollars on brick pavers. Let the buyer do that.