Does it pay to renovate?
If I put a lot of money into a renovation of my house, will it pay off when I sell? Great question, but with a lot of variable answers. If you have room to expand your Georgetown house, a two story addition could easily cost $150,000 to $200,000. Valuable indeed, as it increases the square footage of your property, adding perhaps a very desirable family room and master suite. This kind of addition enables the homeowners to integrate their existing kitchen with the new addition, so you really should upgrade the kitchen while you are at it. And throw in the all-important powder room, too. Wonderful! Oh, a wood burning fireplace makes sense right about now, too. So our two story addition has morphed into a spectacular project costing as much as $400,000. Enough to buy two or three condos in Florida. But did all that expense and bother increase the value of your home by the same $400,000? Probably not. The January 2011 issue of Realtor Magazine has published its most recent Cost VS Value reports. Based on the opinions of local Realtors and real estate appraisers, on the average, sellers can expect to recoup 50 to 75% of their construction costs when they go to resell their properties. Renovations are usually good but many factors come in to play. Some renovations are more valuable than others. Recent renovations are more valuable than older renovations. The all-important kitchen, usually the most emotional and expensive room in the house, can be a fickle place. Decorating trends and appliance design are constantly changing, so your $100,000 state-of-the-art kitchen can become outdated in the twinkle of an eye. As I tell my clients, it costs just as much to replace a ten year old kitchen as it costs to replace a fifty year old kitchen, so beware. Many buyers today will tear out your $100,000 dream kitchen and install their own $100,000 dream kitchen. Seems a pity, but it definitely happens. Consult a very good design company, and be sure to create a kitchen that has the right combination of forward and traditional elements. You have probably heard the caveat, “don’t over-improve”. This simply means, don’t install a $80,000 marble Roman bath in your $100,000 condo in Mississippi. That is, not if you are hoping to recoup any of the value when you sell. Renovations should be appropriate to the location and the scale of the house. Do your homework. One of the wonderful things about living in Georgetown is that our location is indeed upscale, and using expensive design and materials will usually pay off. Someone once asked me, “Should I do the renovation now or when we are ready to sell in ten years?” I can’t answer that for you, but I do think that if you are going to the expense and inconvenience of doing any significant renovation, it would be nice to actually reap the benefits of living in the updated property for at least a little while. Oh, and……this is a tad delicate…but if you and your partner tend to have different opinions about the way things should be done, renovation may not be for you. Have you ever heard that some folks get divorced after going through a renovation? It’s true.