Posted On: November 5th, 2014 5:37AM
Posted On: November 5th, 2014 5:34AM
Built-in aquariums: the amenity that quickly becomes an eyesore. Of all the misfired home improvements that Daniel Fries has observed in his 30 years as a home appraiser, aquariums top his list of 2012 loss leaders—home improvements that offered little to no return on investment. “It’s not a prudent investment,” deadpans Fries, who is based in Atlanta, GA. The tank’s glass fogs, while grimy filters emit an odor of rotting seaweed. Even worse—yes, it gets worse—some owners repurpose fish aquariums as reptile dwellings. And few things send a potential home buyer fleeing faster than the sight of a bull snake in the dining room.
Aquariums top our list of “improvements” with poor return on investment, but every project on that list has at least one thing in common: a profound mismatch between a homeowner’s intent and a neighborhood’s standards.
Local culture, preferences, and market conditions dictate return on improvements. Sink your money into amenities that don’t reflect the norm for your immediate area and you won’t even gain a 5% premium over neighboring homes, regardless of what you spent, says Kevin Cross, owner of the Anchorage, AK-based real estate agency Cross & Associates.
Case in point: Granite countertops actually undermine market value in Alaska. Extreme temperature changes force constant settling and resettling of home foundations, which results in warping and cracking of solid stone surfaces. Laminate gives just enough to make it the counter material of choice.
“Understand that anyone looking for a house is going to stand in front of yours with their cell phone looking at all the estimated values of the houses all around yours,” he continues. “When a buyer looks at a house, they’re not looking for reasons to buy a house. They’re looking for reasons to not buy yours. Your job is to remove as many of those reasons ‘not to buy’. If it’s priced right, clean, staged and looks inviting, an older house will sell faster than a new house even with superior amenities.”
Buyers pick up on price discrepancies immediately and aren’t willing to pay for misguided improvements… like the rest of the items on our list of top don’ts.
Loss leader #2: Built-in electronics
Bragging rights last only a few months when it comes to the latest televisions and sound systems. Once the next gizmo lands on the market, today’s shiny toy quickly tarnishes. The value added by splurging for top-of-the-line freestanding electronics may be debatable, but at least you can easily take the gear with you. Built-ins often dominate the entire room and their reverberations can erode the usability of adjoining rooms, too.
The owner of a $3 million house bragged to Fries that his built-in sound system cost $650,000. That was overkill even for a mansion. “He could have spent $50,000 on the media room and gotten just as much value from it,” says Fries. “You have to consider electronics as personal property, even if they are built in.”
Loss leader #3: Eliminating a third or fourth bedroom.
Sure, a walk-in closet and expanded master bath would be a selling point—but only if that space isn’t hijacked from a third or fourth bedroom. If the neighborhood norm is three bedrooms, a two-bedroom house is at a severe disadvantage. The number of bedrooms should be in balance with the common living space. A house with too many or too few bedrooms has a lopsided layout that won’t be useful to many buyers. Still want that master closet? You might be able to justify it if you apply the second cardinal rule of return (keep reading).
Loss leader #4: Overimproving the basement.
Below-grade improvements never pay back as much as space renovated or added above grade. Carefully compare the cost of renovating the attic, adding a dormer or even raising the roof, to a high-end basement remodel. This is especially true for mid-priced houses. High-end houses may well be able to retain the value of a finished basement, but only if all the above-grade space is livable.
Loss leader #5: Expansive outdoor living space out of synch with the climate.
Outdoor kitchens with manly grills and wood counters can be used ten months a year in the South, so those projects retain value, says Fries. Not so much in the North, where a fireplace is a cozier investment. Cross reports that water features don’t sell Alaskan houses, considering that they are under four feet of snow for half the year. Especially if you are relocating, settle in to the local lifestyle before creating a sunroom, screened porch, elaborate deck or outdoor kitchen.
Each of these horrors is grounded in the grand misconception of home improvement: if you build it, they will pay. Fries explains that appraisers’ guidelines will force a challenge from the lender if improvements boost the market value of the house more than 10% from its value without the improvement. As you scope out the budget for your project, keep the total tab to no more than 10% of the current value of your house. Spend more only if you count the payback in terms of personal enjoyment. Use as a reference Remodeling magazine’s annual Cost vs. Value Report. The regional breakouts chart the cost of remodeling, the return, and the difference. The averages are useful for benchmarking estimates and can help you set expectations from the start.
It can be a balancing act to polish to the point of perfect return, especially if you expect to sell the house soon. Consider putting in one moderately priced focal point improvement that can make the room memorable. For example, one—just one—built-in specialty appliance in the kitchen can be a selling point. That appliance might be a warming drawer, or a wine cooler, or a five-burner stove with a griddle instead of the standard four-burner stove. Even then, calculate your payback in terms of a shorter selling time, not in terms of dollar return.
There is an antidote to misfired improvements. Appraisers call it the ‘cost to cure,’ and it’s the second cardinal rule of return. How much will it cost to rip out the offending amenity and make that part of the house look, well, normal?
The cost to cure a derelict aquarium is only about $1,000. The cost to revert a walk-in closet to a bedroom could be as little as $500. But the cost to rip out an algae-clogged, crumbling swimming pool could run ten times that. When in doubt, get two estimates: one to put in the improvement, the other to take it out.
If you must have it, budget time and money for the ‘cure’, and make sure you squeeze every moment of happiness from that feature in the meanwhile.
Posted On: November 5th, 2014 5:29AM
Reno for Resale
Planning to sell your house this year? Remodeling can mean the difference between "for sale" and "sold." But before you tear the whole place apart, be certain you're investing in upgrades for which you'll see a return. Top tips from Renovation Realty can help you identify the home improvements likely to pay you back.
Kitchen Can't Miss
The most frequently used and commented upon room in your house is the kitchen, and that makes it your number-one renovation priority. Since an up-to-date kitchen helps entice homebuyers, money you spend in this space can usually be expected to find its way back into your wallet.
Even small, low-cost improvement projects can change the face of your home more dramatically than you might expect. For example, a fresh coat of paint will transform the character of a room. Likewise, adding new plants to the front yard greatly enhances curb appeal, and it's important that your home make the best possible first impression.
Keep your eye on what's working for others. Market trends may provide clues as to whether buyers will respond to a remodeling effort you're pondering. Data suggests, for example, that homebuyers are hot on modern bathrooms but lukewarm on home theaters. Also trending are open floor plans and water-conserving landscaping.
In trying to sell your home, appeal to the largest number of potential buyers you can. Hold off on painting the dining room a bold color, no matter how much you might love that shade of purple. Opt instead for an earth tone. Not only do neutral colors help buyers visualize themselves permanently living in a home that's on the market, but subdued tones also easier to paint over.
Do a little reconnaissance. Check out other homes in your neighborhood that have recently sold, paying special attention to those features that buyers have found most appealing. Knowing the details of how other sellers have been successful will help you determine which areas of your home deserve your attention first.
Don't Go Overboard
Don't get caught in the home improvement trap of shelling out remodeling dollars you won't make back upon resale. To be sure you're spending wisely, ask a real estate professional for advice on whether or not to pursue a particular renovation you may be considering.
To DIY or Not?
Know your limitations and avoid having to pay a contractor to fix your mistakes. If you're not 100% sure you can handle a project, seek a helping hand at the outset. Doing so is likely to save you time, money, and heartache in the long run. As always, hire only licensed contractors for any home improvement project you decide on tackling.
If you're interested in more on selling homes, consider:
5 Smart Home Improvements? Think Again!
3 Top Ways to Capture Value in 2013
Bob Vila Radio: Remodeling Return on Investment
Posted On: November 5th, 2014 5:28AM
Putting into action a few simple home staging tips will help your house stand out from the pack in today's improving market. For Sale Home staging may not seem hugely important, but in today's improving real estate market, the tiniest detail could mean the difference between "For Sale" and "Sold." Click through to read all of our top tips on staging your home for sale and watch the bids come flying in!
You may have spent hours making sure the kitchen is clean, and doing so is worth the effort. But remember, the facade is the first part of your house a potential buyer will see. A little landscaping can go a long way. Strapped for time? Potted plants placed around the front door will add welcome charm to your entryway.
Nix the Pics
You want to enable potential buyers to easily imagine themselves living in your place—so don't compromise the fantasy with pictures from your aunt's 90th birthday party. Instead, help other people connect with the house by disconnecting yourself from it.
Update the Furniture
Sure, house hunters aren't in the market for your furniture, too, but that old living room sofa isn't helping your house stand out from the rest. Try giving worn-out pieces a pick-me-up with new pillows or a slipcover.
Update the Furniture. Sure, house hunters aren't in the market for your furniture, too, but that old living room sofa isn't helping your house stand out from the rest. Try giving worn-out pieces a pick-me-up with new pillows or a slipcover.
Think about switching around the furniture in some rooms. Your preferred setup may not be the most appealing one to would-be buyers. Where logical, opt for a social layout that makes it easy to envision the space being enjoyed among family and friends.
If you're willing to pick up a paintbrush, tone down any bold color choices in favor of neutral colors schemes that will make the rooms in your house more palatable for all potential buyers, no matter their personal style preferences.
Kitchen and Bath
During home staging, your bathrooms and kitchen deserve extra attention. The kitchen in particular can make or break a buyer's overall opinion of your home, so if you have reservations about its condition, consider budget-friendly quick fixes.
Stow everything not essential to your daily life: Remove appliances from counters, clear magazines from table tops, and take your boots out of the mudroom. A house on the market should appear ready for a new occupant.
Don't Hide It
Open a window. Doesn't your home feel more homey and inviting already? Opening windows at least ten minutes prior to showings will ensure that your space smells fresh and doesn't feel stuffy.
We cannot stress enough how important cleaning is in home staging. Scrub grout lines in the shower, wipe your window blinds, and wash the concrete floor in your garage. Let no detail go unnoticed! Clean everything.
To make your house irresistible, remember to add a few thoughtful final touches. A bright tablecloth or a vase of fresh-cut flowers can really perk up a room, making your house as welcoming—and worthy of sale—as possible.
If you're interested in more on real estate, consider:
7 Renovation Tips to Boost Your Home's Resale Value
Quick Tip: Why Home Staging Pays
5 Smart Home Improvements? Think Again!
Posted On: November 5th, 2014 5:24AM
9 Little Things You Can Do to Help Sell Your House
By BOB VILA
Preparing to sell your house? You should have two separate to-do lists. In one, itemize the issues a good home inspector is likely to find. Those are matters you must address. In the second list, put down the minor improvements that are totally optional but can be extremely persuasive to a potential buyer. A buyer needs to be able to envision himself in your home, and there are dozens of modest upgrades you can make to help the buyer feel comfortable following in your footsteps. From clearing clutter to replacing bathroom fixtures, find out which simple, affordable fixes deserve attention before you put the place on the market.