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If you are considering a home remodeling project or renovation, there are many things to keep in mind.
Normally, when a homeowner begins a remodeling project they are either doing it for their own personal aesthetic reasons, or to increase the resale value of their home.
What many people do not realize is that not every remodel, renovation or addition will add value on to the home. Sure, a luxurious in-ground swimming pool with matching Jacuzzi are a good addition for entertaining and relaxation purposes, but they could actually deter a young couple with a new family from buying your home in the future.
When beginning any remodeling or renovation projects, it is very important to make sure it will at least add some value to your home, so you can recoup some of the costs associated with these pricey ventures.
An October 26, 2006 article by Terri Cullen of The Wall Street Journal, “Renovations that pay off,” looks into some of the projects that give homeowners the most money back in a resale.
When you begin thinking about your remodeling project, there is one source that will have a lot of answers to the financial side of the project you wish to complete. The “2005 Cost vs. Value Report,” is an annual guide published by the National Association of Realtors, “that estimates what various home projects will pay back at resale. (The construction-cost estimates include labor, material, sub-trades, and contractor overhead and profit.)”
The report lists the renovations that are the most cost-effective; meaning they will generate the most return come time for the sale. It also lists the projects that do not pay off, recoup their initial cost or generate a profit.
According to the report a mid-range bathroom remodel, a kitchen remodel, siding replacement and attic bedroom conversion are the projects that pay off the most.
It estimates that an average mid-range bathroom remodel would cost $10,499 to complete with a resale value of $10,727. This means that the homeowner recoups 102.2 percent of the project’s cost, which is definitely worth it. Not only does the homeowner get to enjoy their new bathroom before they sell it, but they also recoup their total cost and then some.
Although three out of four of these top earning projects are for the indoors of a home, it is still important to consider your home’s “curb appeal,” meaning what attracts buyers to our home in the first place without ever even going inside.
This is where projects such as deck addition, siding replacement and landscaping will help the homeowner to increase value. Potential home buyers are focusing more on the outside of the home than ever before.
“Outdoor space has become more valuable to home shoppers over the years as well: The magazine's 1996 Cost vs. Value Report found that homeowners who made deck additions recouped just 72% of the total cost of the project.”
Now that we know which projects net the most return, we need to take a look at the renovations that will only benefit the homeowner personally, and will probably not gain any value at resale.
These projects include home-office remodel, master suite addition and a roof replacement.
Although they may be a great idea for you and your family’s personal enjoyment, they are not going to help you sell your home for a higher price.
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