Will Your Home Improvements Add Value?
Are you considering updating or improving your home? Wondering if you will see a return on your investment (ROI)?
If someone tells you that if you spend X, you will recover Y, they are wrong. That kind of certainty is not possible. Sometimes you will recover more, sometimes less. In another post, 2009-2010 Cost vs Value Report: Small Projects, Big Bang about which home improvements have the best return on investment.
From the property appraisal perspective, improvment values are determined by how the home compares to others of similar size and location that have recently sold in the area. The Sales Comparison Approach is one of three approaches to value used by real estate appraisers. This approach to determining fair market value uses both data about the characteristics of the home (number of bedrooms, number of bathrooms, size, etc.) along with the condition to determine the appraiser’s opinion of value.
Points to Remember for Home Improvement Projects
Don’t cheap out on your materials or cut corners to a quality level that is below the level of similar homes in your area.
DIY projects that look like DIY projects aren’t going to get you much ROI.
The Best ROI: Elbow Grease
If you really want a great ROI on a project, use more elbow grease than cash, and make sure your work is good quality. A super clean and maintained house (neither of which is expensive, but both of which take time) will fare better both in it’s ability to sell quickly and how easily the appraiser can assess the condition of the property. Dirty houses suggest deeper (maintenance) problems (which may or may not actually exist) and the market (buyers ) will react accordingly.