Maximize Value on Home Improvements
By Chuck Simmons
08/24/2006
When you build a home addition, the idea is usually to get more living space. This is a great short-term goal, but the long-term impact should be considered as well. After all, you may not live in the same house for the rest of your life, so it’s a good idea to think about the possibility of selling your home.
First and foremost, before you add to the structure of your home, make sure you have all the appropriate permits beforehand. There are many horror stories about people who have spent tens of thousands of dollars building a new addition, a deck or whatever else, only to have to tear it down because they lacked the appropriate permits. This is especially true when it comes time to put your house on the market. As part of the process, besides the appraisal, your home will be surveyed and compared against the public record. If anything is out of the ordinary, your house will come under scrutiny and you may have an obligation to return it to its original condition.
That being said, putting an addition on your house can add a great deal of resale value. The key here is to maximize the return on your investment. If you spend $20,000 on a new addition, you’ll want to be sure to get at least that much back in the total value of the home.
In terms of cost vs. value, the bottom line is that most home improvements will be done at a loss if you sell the home within a year, unless you’re in a location that’s inundated with older homes. You’ll need to compare your home to those in your area and get a sense for what the current trend is.
Generally speaking, you’ll get the most bang for your buck by remodeling your kitchens and bathrooms. It really is true that these rooms are what sell homes. Update your cabinets, appliances, floors and fixtures for optimal returns.
You’ll see the lowest return on new additions such as a home office. Other upgrades like windows and external cosmetics may also see a lower return. Though, the added curb appeal will no doubt make it easier to sell your home.
Naturally, you’ll need to weigh the improved quality of life that these improvements create and compare that to the net dollar value. You may find that having more space and a freshly updated home is much more valuable than the money you’ll make – or lose – when it comes time to put your house on the market.
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