Potential Resale Returns For Various Home Improvements
This article reprinted courtesy of
Norm Fisher's Saskatoon Real Estate Resource Center
People are often curious about how certain home improvements are going to affect the value of their homes. The chart of percentages displayed here is intended to give the homeowner a very general idea of the potential that certain improvements have in adding value to your home. Listed below are some other factors that also play a part in the markets willingness to pay for the improvement you are considering.
When determining the actual value of any home improvement, consider this question. Would an average purchaser of this type of home complete this improvement upon buying my property, if it did not already exist? If the answer is yes, then the improvement you are considering is likely to return it's full cost, or possibly even more in added value to the property. If the answer is clearly no, then you are more likely to experience only a minimal increase in your property's value as a result of the improvement.
Additionally, it's wise to consider the average buyer's ability and desire to pay for the feature you are considering. I'm referring to an average buyer for a home in the same price range as yours. Let me give you an example. Let's assume that you are considering adding a sunroom to the back of your home. Of course, no sunroom would be complete without a hot tub. Total cost, $15,000.00. It probably won't take a rocket scientist to determine that this would be an extremely bad investment for re-sale if you live in an 800 square foot bungalow, in a low to middle-income neighborhood. On the other hand, if you own a two thousand square foot home in a middle to high-income area, such an improvement might prove very appealing to future potential purchasers of your home and return a significantly higher amount of the dollars invested upon re-sale.
Certain improvements will never return their full cost in added value. Let's look at the sunroom again. While, the homeowner with the larger home, in the more expensive area can almost certainly expect to recover a greater percentage of the improvement's cost, they will not likely recover it all. Looking back at the first issue raised in this article, it's doubtful that an "average purchaser", even of a home of this quality, would run right out and install a sunroom upon purchasing the home, if it didn't already exist. Quite simply, a sunroom is not a typical improvement in any type of home. Therefore, a sunroom with a hot tub would not be a tremendous investment, specifically for re-sale, in any home.
Finally, you should consider your long term housing plans. Do you plan to stay in your current home for five years? Ten years? There is nothing wrong with completing an improvement that will not deliver a great re-sale return, if such a feature would improve your enjoyment of your home, and you can afford to complete it. Perhaps you'll be content to only recover 50% of the cost of your sunroom. Maybe, the portion of the investment that you won't be able to recover would be money well spent in terms of the additional enjoyment that your home will provide you and your family, while you live there.
It should be noted that the potential return on investment for these features would be determined by the actual need for such an improvement in the subject property. For example, new flooring will add more value to a home that presently has badly worn or dated flooring. If you are simply replacing it because you don't care for the "trendy" color that you presently have, the return will be minimized. These noted improvements are often worth completing for re-sale. A freshly decorated home will sell much faster than one that is dated and showing wear. Additionally, certain features may add more value in some geographic areas. For example, a swimming pool delivers a small return in Saskatoon where the swimming season is short. In Arizona, a pool would likely deliver a better return.
This article reprinted courtesy of
Norm
Fisher's Saskatoon Real Estate Resource Center...
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