To Renovate or Not to Renovate-that is the question!

Today I was part of a webinar through the National Association of Realtors.

Every year, Remodeling magazine and REALTOR® magazine (National Association of Realtors) presents a Cost vs. Value report, which provides the average costs of various home projects on a regional and national basis. The report shows the percentage of money, on average, a seller will get back when they sell their home.

This year the 2009 Cost vs. Value report studied all regions in the United States and highlighted which projects returned the best and worst returns.  As a home seller who is considering sprucing up their home by doing some home improvements and selling their home within a few years, it makes sense to see if the amount of dollars spent will come back to an owner once they sell.

This year the report concluded that some of the least expensive home improvement projects reaped the biggest returns when selling a home. The report  showed that curb appeal home projects had the largest impact on return on investment. In fact, 7 out of 10 exterior home projects had the highest return of investment.  In the report, these home improvements averaged less than $15,000. Additionally, the number one home improvement project generating the greatest return was also the least expensive project. Replacing the front door of a home cost on average, $1200, and had a 128 percent return.

Some of the lowest returns included some home improvement projects such as re-doing a home office, only a 48 percent return on investment, a sun room addition at 50.7 percent return, and a garage addition at 55.9 percent. So, for every dollar an owner puts in, the owner would see approximately fifty cents come back to them when they sold.

It’s interesting to note that a bathroom remodeling project generated a 71 percent return and a kitchen remodeling project generated a 72 percent return.

Additionally, since prices of homes have decreased from 2008 to 2009, the returns on home improvements have also decreased. New appraisal laws are also diminishing the appraised value of many home improvements and the perceived return on investment of higher-end improvements in particular.

So, if you are considering doing a home improvement project in 2010, talk with your realtor in conjunction with a qualified home contractor. Your real estate agent and contractor should be able to suggest what projects will make the most economic sense. It doesn’t make sense to invest $50,000 for a new kitchen into a $300,000 home if similar homes in your area are selling for less than $300,000.

Happy Holidays!

Harry Maisel

Broker Associate-Prudential Rubloff Properties

www.thechicagohome.com

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