Home improvement return on investment

30 May

It wasn’t long ago – maybe a couple of decades – that a homeowner trying to sell a home could sink some money into some last-minute projects and expect to see a windfall when the home sold. That faded about 10 years ago and the return on investment (ROI) has continued a downward trend over the past couple of years.

According to an MSN Real Estate article, (http://realestate.msn.com/10-remodeling-projects-that-pay-back-most) in 2005, ROI on home renovations was 85 percent; now it’s 57 percent. There are a couple of lessons here that homeowners should consider when it comes to return on investment for home improvement projects.

You won’t make a profit on home improvements.

When it comes to home improvement projects, the simple fact is that when it comes time to sell your home, major projects will add value to your home. The problem is that you won’t usually recoup the full cost of your investment. A big kitchen upgrade will increase the value of your home, but you’ll only see 72 percent ROI. An upgrade to your main bathroom may cost you $10,000, but will only add $6,800 in value.

Make home improvements for yourself, not the new homeowner.

You’ll get the best ROI if you plan to stay in your home for a few years. This will allow you to get use out of your new master bedroom, newly remodeled kitchen or refinished basement.

There are some last minute home improvement projects you should be doing.

The good news here is that these are projects that you can do yourself, they don’t cost a lot and they will show a major ROI when you sell.­­­

  • Clean and de-clutter every room in the house, removing excess and putting a lot of things in storage.

  • Brighten the appearance of your home with new, higher wattage light bulbs and let natural light in wherever possible.

  • A healthy lawn increases curb appeal. Concentrate on it when you know you’re going to list your home. Having your landscape professionally done prior to listing is a good idea.

  • Ask your REALTOR® for more suggestions. They will have more ideas for helping appeal to potential buyers, which will help you sell it quickly and for closer to your asking price.


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