Do Home Improvements Make Sense?
by Julie Garton-Good, DREI

Since your home IS your castle, there's nothing wrong with sprucing up the mote from time to time!

But improvements you make should not only make sense esthetically, but financially as well! Before tackling that home improvement project, ask yourself the following questions.

Question #1: Will the improvement be cost-effective and not over-improve the home? Lots of home owners make the fatal mistake of adding value they can't recoup when they sell. This is especially important if the value of homes in your neighborhood has dropped, or is anticipated to drop based on zoning changes, altered traffic patterns or job layoffs in the area. Even if values are stable, be sure not to over-improve the home to a much higher level that other homes around you. It's best if your home's value is just a LITTLE BELOW the best in the area. That way you'll have room for appreciation to strengthen value over time, but you won't be putting money into improvements that the market won't give you credit for when you sell.

Question #2: Is the improvement I'm considering a logical one for this type of home? Although emotion sometimes gets the better of homeowners when answering this question (like wanting gold-plated bathroom fixtures in their $30,000 home!), not answering this question can end up costing you money. A real estate agent or appraiser can advise you what kind of return on your investment the improvement would add to the home's market value. Very few improvement add dollar-for-dollar to a future sales price - but this becomes especially important if you know you'll stay in this house only a short time. Financially, it may make more sense to sell THIS home now, and purchase one with the improvement already complete - without the headache of remodeling!

Question #3: Can we afford NOT TO have the improvements done professionally? Remember that the completed project can either add to or detract from the value of your home. Insist on quality materials by quality craftsmen. Be sure to respect your floor plan as well as the layout and size of your lot when adding rooms. An appraiser would give little value for rooms that lack function, have poor lighting, little closet space, and appear to be an afterthought to the general floor plan.