Considerations

F - Homeowner Upgrades: What can sellers expect to get back?

Historically, major improvements offer partial payback:

The only ones consistently showing a strong chance of recouping your investment are the addition of a bathroom (in homes that originally had less than two) or a newly remodeled kitchen. A moderate sized deck is also a winner since it gives the illusion of additional living space, as does a newer finished basement.

Recent findings reveal that on newer homes (typically less than 10 years old), owners are opting for major renovations in their lower area: game rooms, guest bedrooms, media rooms, craft areas, play rooms, etc. Screened in porches and three season rooms are highly popular, as are enlarged bathroom showers. These trends reflect buyer demand and the willingness to pay more for homes that have these “goodies.”

The return on a particular improvement cannot be easily quantified because enhancements come in different price ranges and integrate differently–in terms of value–with a particular house and its location. For instance, if you installed a swimming pool in a northern climate, it will have limited appeal to your buying audience.

Sellers must measure their dollar return on their investment and balance their desire to keep up with the trends–which come and go. Stainless steel kitchens have lost their luster (so to speak) and multiple jets in large circular tubs just don’t carry the same ring (the chuckles just keep on coming) that they used to.

Visit Remodeling magazine’s web site remodeling.hw.net to see their latest cost versus value report (some of the costs will blow your socks off). For years they have provided a detailed account on the investment a seller can expect to get back on home improvements.

Not working for you, but not working against you:

Many homeowners make upgrades as problems arise. Your AC breaks, you fix or replace it. Roof leaks? You take care of it. But a working furnace, central air, roof, doors that open/close properly and more “basics,” are things buyers expect to be in working order. If you didn't go to the trouble to fix or replace these basics, it would most certainly detract from your selling price.

These types of items reinforce the “everything is working smoothly” factor. While they don't add to the emotional “wow” aspect, they do contribute to the overall value that a home offers.

Take some time to eliminate the negatives in your home by making sure that all major appliances and structural elements of your home are in good shape. These repairs won't make money for you, but they will prevent you from losing money.

A lot of improvements simply make life more enjoyable:

You love your garden arbor, got great use out of the swimming pool, and let's face it–the sound system in the garage made lawn mower repairs much more fun.

These are the kinds of improvements you paid for with discretionary dollars. So be happy that you'll get back even some of the thousands you spent on that greenhouse. Though it won’t be a 100% return on your investment, you enjoyed it for years. Think of it this way: a vacation in Hawaii costs as much as a greenhouse, but you'll never see a penny back from that expenditure.

Take comfort in the fact that although you won't get your money back on your upgrades, but that price appreciation should cover the cost of your improvements.