Not all renovations are equal. Before you start knocking down walls, the experts offer some words of advice. They say the two most important words to remember are: resale value.
Basically, remodeling projects are either ones that pay off when you sell the house and ones that don't. For simplicity, let's just call them renovation winners and losers.
Luxury rooms. Unless you live in an upscale market, you won't recoup an investment in an indoor basketball court, wine cellar, sauna, or movie theater when you sell, reports RISMedia's Housecall. Remember that today's technology is tomorrow's eight-track player.
Swimming pool. With an average cost of nearly $40,000, pools are an expense seldom recovered when the home is sold. Many think a pool limits resale value. Some buyers just don't want to do the maintenance. A guy I know builds pools for a living; when looking for another home, however, he would not consider any with pools. I've always thought that having a friend or neighbor with a pool is the better way to go.
Gaudy accents. Gold-plated molding or mosaic-tile backsplashes might be your dream, but they may not be in vogue when it's time to sell. I recently heard about a home on the market that's decorated entirely in a clown motif. That could be a tough sell unless the buyer's a real Bozo.
Trends counter to local standards. Improvements that price your home out of the norm for those in the neighborhood may net you far less than you put in. Having the most expensive home on the block makes it hard for a real estate agent to find comparables when pricing the home to sell.
My wife is a real estate agent. She says a common losing remodel involves converting the garage to some other use. Just this week a homeowner wondered why her home with a garage-turned-game room wasn't selling when properties in the neighborhood were on the market less than a week.
Steel doors. The front door is a good place to invest, says RISMedia. Steel doors cost about $1,000 but offer many advantages. The National Association of Realtors reports steel-door upgrades bring the highest return on investment of any home remodel.
Solar panels. The average rooftop solar system pays off in seven and a half years. From then on, they are money in the bank. One study shows buyers willing to pay more for properties with solar panels. For more information on the value of residential solar, read Dr. Harold Hunt's article “Here Comes the Sun."
New siding. Talk about curb appeal. Your home's exterior makes the first impression. According to Remodeling Magazine, new siding recoups 92.8 percent of its cost.
New roof and windows. Replacing roofs and windows are also high on the list of winning improvements, returning 80 percent or more at resale. If the roof leaks, nothing else matters. Buyers will move on to another property.
Broadband access. Homebuyers want to be connected. Faster internet speeds increase your home value as much as 3 percent.
Other items. In “Which home improvements pay off?" HGTV.com notes that other improvements pay off, too. Kitchen and bathroom remodels continue to be two of the best investments you can make in your house. Renovations that are not apparent (such as improved insulation) may pay dividends for the current homeowner, but they don't add to the curb appeal for the tire-kickers.
If you are going to repaint, consider your color choice carefully if you have resale in mind. Neutral color schemes are the safe bet.
Should you replace that old carpet? It's hard to predict what a new buyer wants. Maybe you should clean the old carpet and give an allowance for a new floor when setting the price. A couple I know thought replacing their carpet would help their home sell. The first thing the buyer did was rip out the new carpet and put down wood.
Want to know what homebuyers want? Take a tour of new homes in your area. The things home builders are splurging on is a good indicator of what buyers of existing homes want, too.