7 Things to Consider Before Starting a Home Improvement Project
Are you thinking of making some changes to your home? Home improvement is a lot like making an investment in your home. Like any investment, if you go about it right you should expect a return. After all, you are putting money into your home, and shouldn’t you therefore expect more money back in added value to your home when you sell? In some cases, the answer is yes.
There are a number of things that will impact whether you will see a positive return on your home improvements. Here’s a list of factors you should give serious consideration before starting any moderate to large scale home improvement project.
Quality of Life
Ask yourself how much impact the home improvement project will have on both your and your family’s overall quality of life. Will there be major or minor disruptions to your lifestyle during the work in progress? What changes will the project make in your lives after the project’s completion?
If You Are Ready to Sell:
- Your home’s value is your primary focus
- You should be willing to tolerate temporary lifestyle disruptions in order to make your home more valuable to your upcoming prospective customers
- Only projects with a positive return on your investment are worth undertaking since you are not planning to stay and enjoy the home after the project is completed
- Bathroom additions have traditionally had the best return on investment, while the recent surge in energy prices has also increased buyer interest in energy efficient changes. Kitchen remodels, while they can greatly improve every-day life in your home, usually don't add as much value to as you might think.
If You Are Staying Put:
- You will want to balance any disruptions to your lifestyle with the added quality of life the completed changes will provide
- As with any major project, it’s also important to keep a long-term perspective – how will any changes made today affect your home’s value in the future?
Timing
How quickly will your project get done? For minor projects, this means asking whether a project can be completed in the required time. However, with more extensive remodeling or addition projects, you may want to complete the project in various stages in order to decrease the impact of the project on your lifestyle at any one time.
If You Are Ready to Sell:
- If you are nearing the time to list your home, you will want to complete your project as soon as possible
- Depending on the scope and scale of the project, you may need to have multiple phases completed at once, which are bound to cause inconvenience and/or discomfort
If You Are Staying Put:
- Time is not a restriction and you can schedule your project to your level of tolerance to lifestyles
Location
Consider how the location of your home, on both a regional and neighborhood level, will make a difference in the cost and added value of your project.
Nationwide, a mid-range minor kitchen remodel has an average cost of $17,928 and a resale value of $15,528, according to Remodeling Magazine’s 2007 annual Cost vs. Value Report, meaning that you'd only get back 85.2% of your investment. Undertaking this same project in the Pacific region has an average cost of $19,366 and a resale value of $20,614, making the improvement profitable.
Even more important than regional differences in valuations are neighborhood differences in valuations. For example, if your home compares unfavorably to those in your neighborhood, you are likely to get less for it when you list it for sale. If all the homes in your neighborhood have 4 bedrooms and 2 baths, and yours is a 4 bedroom 1-1/2 bath, you may want to consider converting your ½ bath to a full.
If You Are Ready to Sell:
- Focus on ensuring your home is comparable to homes in your neighborhood first
- Consider additional projects as time and budget allow
If You Are Staying Put:
- Since you have no time constraints, you have flexibility of what can be done and when
- Always keep your long-term focus on improving the value of your home
Style
Think about how much of your personal style is reflected in your home’s fixtures and architecture and how that will affect the resale value of your home. Everyone has their own style and feels more at home when their home reflects their style.
If You Are Ready to Sell:
- You may want to opt for more classic or traditional styles, in order to stay neutral for your prospective customers
- If you are unsure about what to do, talk to your real estate agent to get a second opinion
If You Are Staying Put:
- Since you have no time constraints, you have flexibility over how much of your own style to put into your home
- Again, always keep your long-term focus on improving the value of your home
Moderate vs. Up-Scale
The relative luxury of the home improvements you choose will affect the value of your home. Spending more now doesn’t necessarily mean you will have a better return later. Do your research before starting any project.
If You Are Ready to Sell:
- Moderate home improvements will allow for more flexibility in your home pricing
- Depending on your neighborhood, up-scale or moderate level improvements may be more desirable - speak with your real estate agent before starting any major home improvement project
If You Are Staying Put:
- Upscale home improvements may offer improved quality of life over moderate home improvements
DIY or Hire an Expert?
Do you really have the time, patience, and expertise to successfully complete the home improvement project? Be honest with yourself.
If You Are Ready to Sell:
- An expert’s work may have more value to your upcoming prospective homebuyers
If You Are Staying Put:
- If you have the expertise, you may be able to save money by doing the project yourself
- If you don’t have the required expertise, home improvement projects can be both dangerous and more expensive
Recent Downturn in the Real Estate Market
Has the recent downturn in real estate had an impact on the ROI of home improvement projects? The cost of
If You Are Ready to Sell:
- Talk with your real estate agent before beginning any project to see if it is worth your time
If You Are Staying Put:
- If you won't be moving soon, you will get value out of your home improvement project in lifestyle improvements - consider this when evaluating the economic impact of any project
- Always keep your long-term focus on improving the value of your home
When in doubt, you should consult with your real estate agent before beginning any moderate to large scale home improvement project. They should be able to give you the most accurate information regarding what you could expect as a return on your investment.