Smart Remodel, Big Returns
Upgrade tips for bed, bath and beyond
by Bernice Ross, Inman News
DEAR BERNICE: We’re planning on remodeling our two-bedroom, one-bath house and were wondering what upgrades will produce the best return on our investment. The house needs a new kitchen, and another bedroom and bath. We also thought of putting in a pool. Where should we begin? –Andy K.DEAR ANDY: A common misconception about upgrades is that they always increase the value of the property. Upgrades normally make a house more saleable (i.e. easier to sell.) They don’t necessarily increase the property value. For example, assume that you upgrade your property with cherry cabinets and green granite countertops. You sell the home to someone who wants white European cabinets and black countertops. Your upgrades made your home more attractive to more buyers, but in this case, the upgrades are not worth much if the buyer intends to tear them out. When deciding what to upgrade, the smart decision is to upgrade your home for your own enjoyment.
You will obtain the biggest return from your investment if you add the extra bedroom and bath. Increasing bedroom and bath count is one of the smartest ways to increase property value. It also makes your property more appealing to a wider variety of buyers.
As a rule of thumb, increasing square footage increases value. There are some exceptions, however. For example, if most of the homes in your area are 2,000 to 3,000 square feet and you do an addition that makes your home 4,500 square feet, chances are you have over-improved the property. This means that your property is worth less than 4,500-square-foot houses that are surrounded by houses of similar size. The smaller homes in your immediate vicinity would drag your value down.
In terms of return on investment, pools are tricky. Do most of the homes in the area have pools? If so, adding a pool would make your property more comparable to the other homes in the area. On the other hand, many people don’t want the upkeep or risks associated with having a pool. Others may prefer to have a nice backyard where they can create the perfect garden.
Be sure to protect yourself by carefully investigating any contractors prior to hiring them. Does the contractor hold the appropriate licenses to do work in your city? Use Google to search the contractor’s name and company. Also search sites such as Yelp. Ask for references and contact them. If possible, go see the contractor’s work firsthand. Finally, it’s also smart to obtain at least three bids. If a bid is too good to be true, be wary.
If you’re feeling confused (which is what I felt when we were facing a major remodel on one of our houses), you may want to explore a company such as ServiceMagic.com. They screen contractors prior to adding them to their database. You can read reviews as well as obtain estimates. After reviewing bids from four ServiceMagic general contractors, we chose one who did an outstanding job on our remodel. Again, no matter whom you interview, carefully investigate their reputation and their work before giving them a deposit.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of “Real Estate Dough: Your Recipe for Real Estate Success” and other books. You can reach her at [email protected].
Copyright 2009 RealEstateCoach.com.
See our feature, Save Money on Remodeling.
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