Your home: A hot market = higher return on home improvement projects

PaintEvery January I not only look forward to beginning of a new real estate year, I also look forward to the latest Cost VS Value results. I utilize this information all year long when I consult with clients concerning upcoming projects or those that have been completed. This report breaks down the most common home improvement projects are and what the average return on investment has been for the prior year. Historically, it just broke the numbers down regionally. In the last few years they added the option to choose the closest major metropolitan city. It just so happens that Kansas City is one of the options. Yeah us!

So what are the top three projects when it comes to ROI? Here they are in order:

#1 Garage Door Replacement- 77 percent ROI
#2 Minor Kitchen Remodel- 75.3 percent ROI
#3 Entry Door Replacement- 67.56 percent ROI

Although the aforementioned projects have achieved the top three spots when it comes to ROI, they are not necessarily the best projects to undertake when preparing a home for sale.

Certainly the minor kitchen remodel is one of the best projects in my book. Keep in mind that the Cost VS Value report considers a minor kitchen remodel one that does not remove the existing cabinets but does replace the cabinet fronts and hardware. Additionally, the remodel should include new solid surface counter tops, new appliances, freshly painted walls and trim, and new flooring. For some that may sound like more than just a minor kitchen remodel. Major or minor, a freshened up kitchen is what the market expects these days and is becoming the minimum standard when it comes to resale.

The next project that I would recommend would be anything that would help create a master suite. I realize that sometimes it is just not in the budget to add a suite to a home. So if that is not possible, make sure that the closest bathroom to the master bedroom has been updated. I would also suggest that you maximize and organize any and all available closet space. You would be amazed at how much more marketable a bedroom can look with a good quality closet organizer installed. The National Association of Realtor’s 2013 Profile of Home Buyer’s suggests that the majority of recent home buyers would have preferred more or larger closets and more storage overall.

Lastly, if you have the opportunity to create a second living space without changing the footprint of your existing home, go for it. A good example would be an unfinished basement that could be turned into a family room, or an unfinished attic in a Cape Cod that could be turned into additional bedroom space — or better yet a master suite. One of my favorite projects is when a Cape Cod owner has attic space above the garage adjoining an upstairs bedroom (hopefully the master) and turns it into a huge walk-in closet. I have yet to see that project not pay for itself.

One quick word of advice, if I may? Please consult with your Realtor and a great contractor (like Lance McCarthy of ReTouch and my fellow columnist) before you take on any projects. Sometimes the best solution for your existing home is to price it appropriately to overcome any potential objections and save your money for your new home. You may end up coming out ahead in the end.

If you would like more information about the 2013 Cost VS Value report, please email me and I will send you the PDF version for our Kansas City area.

Photo Credit: Phil Roeder on flickr.com

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