As a licensed REALTOR® I have a subscription to REALTOR Magazine, a comprehensive publication provided by the National Association of REALTORS®. One of my favorite issues is the annual issue featuring a real estate Remodeling Cost vs. Value Report compiled for the current year (2006). Download their report here.
I like to save this article to bring along on listing presentations to help back up some items sellers might think are worthwhile expenses to sell their home when I feel they won't get their money back. In my opinion, this is one of the most informative articles the magazine puts out every year.
You Can't Always Get Back What You Paid
One seller insisted that he wanted to add the $5,000 onto the market value of his home because that's what he spent on some dark paneling. First, if he spent $5,000 on it he got ripped off, and I think we all know what buyers feel about paneling today. Another woman wanted extra money for the heavy drapes she had custom made for her Palos Heights townhome. I never told her that the buyer replaced them as soon as she moved in.
Best Bang for Your Buck - It's Local
There was an HGTV show about remodeling in different areas and who got the best bang for their buck (I think that might have been the name of the show). It was interesting how where you live can affect what remodeling will bring you the most value when you sell. Everything with real estate is local. What might be popular in California could be a turn-off in Illinois.
What I try to remind sellers is that they won't get back 100% of their investment, even if they make an update right before selling and it's brand new. Your update might not be what a buyer would have done. They appreciate that something has been remodeled but if it isn't in their taste it won't emit the emotion it did in you.
Maintenance is Not Remodeling
New windows, new roof, new furnace, etc. are all appreciated by buyers. But these are necessities and when you purchase a home you have to keep maintenance in mind. We promote those new items as they are definitely important. If buyers are choosing between two homes, the one with the new roof might be the home they make an offer on.
Both maintenance and remodeling/updating can put your home at the top of the price range, but don't expect to get back what you spent. It can help your home sell faster than others as your home will be considered the cream of the crop. But it's still going to have to appraise if a buyer has financing, and an appraiser only gives so much value to upgrades.
If you're thinking of selling within the next year or so don't do any remodeling until you talk to The Judy Orr Team. We'll tell you what needs to be done, if anything. Many times all it takes is some staging. We don't want you to lose money by updating something that won't help much. Find out the value of your current home by clicking here.