29 May 2007

Home Remodeling & Avoiding Costly Mistakes

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RemodelAs a Real Estate Broker I’m constantly asked about the remodeling and value of home improvements. Normally my answer is, it depends. Many different factors including geography can me a difference on your return of investment. Meaning your local, where you live in the U.S. Some improvements may be more suitable for one part of the country as opposed to another. And consider this, the cost of improvements vs. the overall value of your home? You don’t want to over-improve your home for the neighborhood, unless you’re absolutely positive you will remain in the home for the economic life of the improvements. And that rarely happens.

Another thing to consider, not placing all your eggs in one basket. By that I mean, as opposed to spending $60,000 for every new bell and whistle in your kitchen for example, consider spreading that amount of money around in multiple improvements. Maybe one-half in the kitchen, and then consider bathroom improvements as an example.

Not long ago I was viewing open houses in a desert community looking at condos. While visiting one property it appeared the seller did a huge remodel in one bathroom. Trying to recoup that expense, that property was priced higher than all others based on one room, his bathroom. Now keep in mind the kitchen was still in original condition (except a new coat of paint on the original cabinets) and the other bathroom was still in the same builder condition. That’s an example (as far as I’m concerned) where the seller spent too much money in one specific area/room.

So you can see, in the event you’re selling within five or so years, it’s unlikely you would be able to recoup all your investment in one particular room. You also want the cost and the quality of your improvements to be commensurate with the overall value of your home.

The list below is an analysis of prospective homes improvements and your return on your investment according to the National Association of Realtors. These calculations are based on the average return on improvement projects in the greater
Los Angeles area. They are also based on projects in the mid-range of home improvements.

Window Replacement 111%
Minor Kitchen Remodel 102%
Bathroom Remodel 101%
Major Kitchen Remodel 95%
Roof Replacement 91%
Bathroom Addition 90%
Family Room Addition 86%
Home Office Remodel 80%

Any questions contact me: Lynda Eisenmann, Prefered Home Brokers


About the Author

I maintains an active residential re-sale brokerage in Brea, CA, located in Orange County, about 20 minutes north of Disneyland. Contact Lynda directly at (714) 595-1494, or Lynda@PreferredHomeBrokers.com – CA License #00402040

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