Pittsburgh Home Remodeling - Add Value To Your Home With An Extreme Makeover

Add Value To Your Home With An Extreme Makeover

Where can the average Pittsburgh Homeowner find a guaranteed (or almost guaranteed) positive return on their investment? With the stock market refusing to offer the surefire returns of prior years and Ann Arbor housing prices continuing to rise, many homeowners are surprised to learn that the answer to this question is all around them. Literally.

For most people, the equity in their home makes up a larger portion of their net wealth than holdings in the stock market or retirement funds. Compared to stocks and bonds, whose value rises and falls with regular frequency, housing has been a relatively stable and sound investment that keeps up with inflation in most years and outpaces it in others.

Although very few of us purchase a house solely for its investment value, the fact is that your home is an asset that can pay high returns when it comes time to either refinance or sell. Of course, not all houses are created equal. A home that has up-to-date systems and amenities will have a higher value than one that doesn’t. A home that has been well-maintained has a greater value than a comparable home that is poorly maintained. In addition, a home that has the conveniences and extra living space that today’s buyers want is a house that will offer a higher rate of return on your investment when it’s time to refinance or sell.
So, you own a home that may not be quite up to date and you’re wondering what to do? Remodel, of course.

Home Remodeling is the key to protecting and enhancing the investment value of your home, not to mention its many other benefits.

The National Association of Home Builders estimates that American homeowners will spend between $220 billion and $225 billion on remodeling projects in 2005. In addition, home equity levels are at an all-time high at $9 trillion.

Several factors are driving the demand for home remodeling. One of the most important factors is the increase in housing values over the last several years. With home prices on the rise, more homeowners are turning toward home remodeling to add to their quality of life. Home remodeling also boosts the value of their original investment.

Now, here’s the real issue: What improvements adds the most value to your Pittsburgh home? To answer that question, it is important to understand that a home remodeling project — and your home for that matter — is different from a purely financial investment. What’s unique about housing is that the investor, or owner, receives the immediate benefit of being able to occupy and enjoy their investment. That is, you get to live in it while it is growing in value. Stocks and bonds don’t offer this benefit. The longer you intend to stay in your home to enjoy the new family room or whatever improvement you make, the more weight this factor contributes to your overall return on investment.

The other part of your investment return is the increase in resale value that the home remodeling project adds to your home. Ultimately, a real estate appraiser will decide the financial return of any home remodeling project through the price assigned to your home when you decide to refinance or sell. The cold hard truth, however, is that real estate appraisals are more an art than an exacting science.
The value of your home depends largely upon "comps," or the prices that comparable homes recently sold for in your neighborhood. The value assigned to the home improvements you made to your home depends on a number of variables, but particularly on the location of your home as well as its overall condition. Some remodeling projects lift the value of a home by the entire cost of the remodel and sometimes by even more. When you are deciding whether to undertake a home remodeling project, you need to balance the cost of the project with the values of the houses in your neighborhood. If you plan to resell, you need to be careful not to add so much to your home that you become out of balance with the other houses around you. If so, you may not be able to recover the project’s value when you try to sell.

Despite the limitations of the appraisal process in allotting what you might consider a fair value for all the improvements that you have made, there are certain rules you should consider to increase the dollars you get back from your remodeling investment: Take care of your home. Maintaining your home is the most critical of all investments that you can make to your home. The shape it’s in matters as much if not more than what other attributes your home may have.
Do high-quality work. The quality of the work you have done on your home is another factor that can’t be ignored. If you are looking to make a good investment, shoddy workmanship, low-grade materials and inferior products will wipe out any value the remodeling might have added to your home. Seek out a remodelor who is a member of the local chapter of the National Association of Home Builders.

Make sure you like the project. Base the decision to remodel on what you and your family want and need, not on what you think the next owner might want. It is a gamble to predict what the likes and dislikes of the next owner might be. Keep in mind, however, that the more your tastes stray from the norm of most of your neighbors, the less likely you are to get maximum return from your improvements. Stay with styles, colors and features that have broad appeal.
Kitchens and baths. Year in and year out, kitchen and bath remodeling projects are the most popular, no matter where you live. Minor kitchen remodels tend to recoup more of their costs than major kitchen remodels. Bathroom remodels also vary on how much they add to resale value, depending on the extent of the makeover. These two rooms carry the most weight when it comes time to sell your home. Attractive kitchens and baths fully outfitted with popular features will not only help sell your home faster, they can also increase the price that a buyer is willing to pay for your home. Remember to keep in mind the overall value of houses in your neighborhood when you decide on the magnitude of your total expenditures.

Space, but in the right place. Extra space in the right place offers a high rate of return since existing homes tend to lack the roominess of new homes. New family rooms, larger master bedroom suites and eat-in kitchens are all examples of spaces that most buyers value highly. If you are buying a new home, look for one that has space available to finish at a later time. Unfinished basements, bonus rooms and other unfinished areas are great for adding value in the future.
Although it is difficult to put an exact price on the resale value of a particular remodeling project, for most of us the real value of remodeling is the comfort and pleasure it adds to the years we spend living in our home. When you’re ready to start that project you’ve wanted to do for so long, find an experienced remodelor from the local building association and ask his or her opinion. They can almost always give you sound advice on the estimated costs of a project, whether the project is worth the investment and what the project will add to your quality of life.

Julian Bell III is executive officer of the Home Builders Association of Southern Tennessee. He is among several industry representatives who are contributing columns that will appear in the Real Estate section on Sundays.

Article written by Julian Bell III, 2004, Chattanooga Times Free Press, Inc