Home Improvement Return on Investment

Decisions on home improvements vary by want, need, and return.

It’s often hard to calculate a home improvement return on investment, as one high-end appliance or custom tile selection can radically change the budget. However, real estate and contracting professionals agree that some improvements always add value to a home.

Assess the Value of Improvements

The National Association of Realtors conducts periodic research to determine the value of home improvements. A recent study revealed that:

• A laundry room not located in the basement increases market value by 15 percent.
• Houses with a fireplace sell for 12 percent more than a similar house without one.
• Garages also garner approximately 12 percent more for the home’s sale.
• An extra bathroom increases the value of a home by 24 percent.

Remodeling magazine issues an annual cost versus value report that evaluates the rate of return on certain projects. Its 2006 findings conclude that the general cost of home improvements is more than the current rate of return, which is somewhat stagnate at 2002 values.

Most professionals aren’t bothered by this news, however, for it seems to be a reflection of slightly inflated home prices now settling to a more acceptable level than during the whiz-bang housing boom over the past decade.

Nothing is Ever a Full Return

This bears repeating: you will never truly recoup your home improvement return on investment at 100 percent. Nevertheless, certain upgrades and remodeling projects hold value longer, attract a buyer’s eye more quickly and, most importantly, add a sense of pride and pleasure while you continue to live in the home.

Here are just a few figures from Remodling magazine’s most recent report.

Family rooms also continue to be popular additions, but obviously, as the facts demonstrate, the most lucrative home improvements update and repair the quality and structure of the home, especially in the most highly used areas. Energy efficiency is another major factor when considering what to mend and polish. Even a home built in the late 19th century can benefit from consistent maintenance that will help it stay attractive.

Review Remodeling magazine’s website for more information.

Home Improvement Return on Investment Advice

Do some soul searching to really determine how long you’re going to live in the home, and what immediate repairs and upgrades will impact you directly. Many improvements simply need to be done, and although general enhancements like a new cement driveway may not be as jazzy as a glass wall partition with a circulating fountain, in the long run, the well-maintained basics help your home retain value.

This applies to landscaping as well. Not everyone is a master gardener, so a backyard that practically cries out for a daily visit from a horticulturalist may not be as attractive to some buyers. But, if you love gardening, take good care of the garden for your own well-being, not because it might up the resale value.

Real estate experts agree: buyers aren’t always looking for the sleekest gadgetry or mahogany cabinets. In fact, it may surprise you to know that some buyers may be put off by your cosmetic home improvement choices.

So the criteria for estimating your home improvement return on investment is what matters most to you, and what your budget will allow. Hopefully, if you need to sell, the total presentation of your home, including interior staging and enhanced curb appeal, will make your home an irresistible choice.