Homeowners making minor home improvements instead of pursuing major remodeling projects can expect the greatest potential return on investment, says the Appraisal Institute.
“In general, simpler, less expensive projects have the best cost-to-value ratio,” says Appraisal Institute President M. Lance Coyle, MAI, SRA. “With the spring home buying season around the corner, homeowners should invest in projects that are most likely to preserve the value of their homes.”
This assertion stems from Remodeling magazine’s most recent Cost vs. Value report. Minor projects with potential major payoffs are mid-range and upscale garage door replacements, manufactured stone veneer, mid-range window replacements and minor kitchen remodels.
Coyle says that some homeowners might choose to fund home upgrades with tax refunds. Before calling a contractor or heading for the home improvement store, however, he says they should consider if the improvement is in keeping within community norms.
“It’s possible that consumers won’t be able to recoup the cost of the upgrade when the home is sold, so it’s important to meet, not exceed, what’s standard for the neighborhood, and to also consider expected length of time in the property,” Coyle says.
He also says that making routine home repairs is essential to maintaining a home’s value. A house that has been well maintained likely will have a higher value than a similar house that is in disrepair. For example, replacing worn out trim boards may in certain situations not add any additional value to the home, other than to preserve the value that would be likely as evidenced by sales of similar homes in the area that do not have worn-out trim boards.
Some green and energy-efficient renovations – such as adding Energy Star appliances and extra insulation – are likely to pay the homeowner back in lowered utility bills relatively quickly. Lower utility costs also are a draw for potential homebuyers.
Source: Appraisal Institute
Published with permission from RISMedia.