Keeping Your Area in Mind when Renovating

How much should you plan on upgrading during your remodel project? The fact is, depending on what you are trying to accomplish, you can spend anywhere from a few hundred dollars, to tens of thousands on the very same room.

As before, we’ll be moving into this discussion with an eye towards getting a good return from your investment, assuming that you will be selling at some point in the future.

After all, if you have no intention of moving at any point in the next ten or more years, ROI doesn’t matter as much as your return comes from enjoying the finished product.

It seems intuitive that you would want to upgrade as much as your budget allows and make your home into the jewel of the neighborhood. However, while you will no doubt enjoy knowing that you have transformed your humble ranch into an HGTV-ready show home, such a move could backfire in a big way when you put your home on the market.

Take a look down your street. Observe the condition of the homes and yards in your neighborhood. Are they well maintained or a little run-down? What about the inside of the homes that you have been in?

Are the interiors tastefully decorated and contemporary or do they reflect the fashions of generations past, sporting an array of burnt orange countertops, olive green appliances and paisley wallpaper? Whatever the case, that should be your measuring stick.

The reason for this is simple, no one who can afford a $200,000-dollar home is going to look in an area surrounded by $100,000 dollar homes.

Conversely, anyone looking in a neighborhood of $100,000 homes can’t afford the $200,000 you would like to charge, or they are looking for a deal.

So if you go all in and design and build the ultimate spa-getaway in your master bathroom, or put in that home theater you’ve always wanted in the basement, you are not going to get that money back if you are the only home in the area with those kinds of features.

Your home will sit on the market for months until you come down to a much lower price than you would have wanted.

How to avoid these kinds of mistakes?

 If you remember, way back in chapter one, we recommended making use of a real estate agent to help determine what sorts of renovations you should pursue.

Your agent will already be familiar with the general standards of the surrounding area and what price ranges people are looking for. He will also be familiar with what improvements bring the best ROI, what styles are currently trending and even have suggestions on how to accomplish them quickly.

So while you may well have been thinking about going all out and putting in granite countertops and all new kitchen cabinets (a renovation that would surely cost thousands) he might talk you down to some fresh laminate for the countertop and a new coat of paint for the cabinets to brighten up the room.

Your remodel cost just went down from several thousands of dollars and a week or two without a kitchen to a little more than $1000 and a day or two of minor inconvenience.

An agent will also go beyond your neighborhood, looking at how your home compares with similar homes in the larger area. This is important as your real competition extends beyond what you can see out your front window.

Unless your neighborhood has a unique setting or is uniquely close to parks, beaches or a vibrant downtown area, there will generally be no reason for a person to buy a house on your street over one in another neighborhood on the other side of town.

Your real estate agent will be able to do side by side comparisons of your home with others that are similar, making sure that you are able to compete effectively across a wide area.

Take the general condition of the outside of the home into account as well. If the surrounding yards are patchy and overgrown with weeds, it is not worth putting in a ton of money to put in a golf course or enough flower beds and trellises that people driving by might mistake it for a bed and breakfast or a fine place for their daughter to have her wedding reception.

You know you have gone too far if they stop and ask how much it costs to rent the space.

Many buyers will also seek out new homes just by driving around, looking at neighborhoods they think may be in their price range.

Your stone walks, hanging vines and pergola will certainly catch a buyer’s eye as he drives through, but if you are the only one on your street with anything even remotely like that, they will assume that you are charging more than they can possibly afford and won’t even bother to look any further into it.

This can continue even after you have reduced the price after having the home on the market for a couple of months.

That isn’t to say you should park some used appliances on your front porch if that happens to be common in your area and price range. Or that you should copy the neighbor’s shrubbery.

You should at a minimum present an image of a well-cared-for house that is in solid condition. And standing out a little bit is not a bad thing, just don’t overdo it.

Some agents say that the longer you are in the house after the renovation the more likely you are to recoup the costs. This is true that home prices tend to go up over time and the natural inflation will absorb whatever costs you incur.

Keep in mind though that this clearly is not a law as we all remember the recent housing crisis in which prices plummeted and from which we are only just recovering.

Others will point out that the more recent the renovation, the more likely a buyer will see that it is new and thus assign more value to it. If your privacy fence or bathroom are a few years old, they will have begun to show normal signs of age and blend into the rest of the property.

Also, with any renovation, whether landscaping, doorways or kitchens, don’t try too hard to make it meet the highest demands of fashion.

Make it contemporary, but don’t go for the bleeding edge of home design.

Not only are you likely to spend too much money and price your home out of the market but you are likely to find that a couple years down the road, your height of fashion will become yesterday’s news.

Or worse, it will become the new olive green.

What you hoped would be a pot of honey to attract prospective buyers with deep pockets will instead be more like a can of Raid, driving them away and onto the next property.

In short, keep it simple. If you are remodeling with an eye towards resale, less is often more.

Simple projects like replacing exterior doors, fresh stain on the deck and a fresh coat of paint are more likely to aid your home sale and result in a good ROI than larger projects like room and outbuilding additions.

Make sure that the basics are set, taking care of leaking pipes, buggy appliances and all the doors and windows open and close as expected.

If you do decide to go with a larger project, pick one that still leads to a good ROI like a relatively modest kitchen remodel, always being careful not to spend so much that you price yourself out of the market and make it even harder to sell.


 

Relates To  -  home seller tips