Spring is just around the corner. I know people are wondering if our mild winter will continue or we’re still going to see a storm or two before the tulips arrive. Usually with spring comes heightened activity in the real estate market – improved weather lends itself to moving and repositioning. In this season or any other time, many owners start taking stock of the condition of their home and looking at possible home improvement projects. When I meet with homeowners, they often ask - should I sell “As Is” or should I make improvements to my home before selling?
At first glance, that doesn’t seem like a very challenging question. After all, a renovated kitchen is more attractive than an old style one; a fresh coat of paint feels clean and more appealing than your beige wall with the stain on it. On second thought, the answer comes after you start pricing out your home improvement projects. If you’re not able to do the work yourself – you begin to realize that this can be an expensive proposition. Let’s take another perspective for finding a practical solution - ROI.
ROI stands for Return On Investment. The dictionary says that ROI measures the gain or loss generated on an investment relative to the amount of money invested. Applying that concept to home selling – it’s the amount of the money you can expect to recoup on any given repair or renovation. Rarely can you expect more value than the money spent. In some cases, the percentage of gain is so high it makes the work worth doing.
According to RIS Media – here are 5 top renovations and the reported ROI on each:
1. Garage door replacement - 91% ROI
2. Manufactured stone veneer - 97% ROI
3. Minor Kitchen Remodel - 81% ROI
4. Wood Deck Addition - 83% ROI
5. Entry Door Replacement - 91% ROI
A high ROI means that you will get a significant amount of the money spent back in the sales value of your home. It also makes your home not only competitive, but also attractive. So adding a deck to your home can help increase market value.
When you are looking at a project that has a low ROI, it may not be advantageous to do the work. In other words, you are spending a lot of money for little gain. You can also run the risk that a buyer won’t “like” the design choices you made and makes them resist a higher price.
Also according to RIS Medea – here are 5 renovations with a low reported ROI:
A. Backyard Patio - 47% ROI
B. Master Suite Addition - 48% ROI
C. Major Kitchen Remodel - 53.3% ROI
D. Bathroom Addition - 55% ROI
E. Bathroom Remodel - 56% ROI
My advice to sellers is – if you are going to spend money on your home before a sale, stick to high ROI items and low- cost solutions like painting and staging. Be realistic about how your home compares to other homes on the market, and don’t base the selling price of your home on what you paid and what you spent while living there.
My advice to buyers is be aware of the condition of the home and what improvements have been made. Remember that if a seller did renovate – that is a cost savings to you in the long run. And as always, there is no absolute value to a home. It’s the market value – what a credit worthy and ready buyer is willing to pay at any point in time – that will determine the final selling price – “as is” or not. Please feel free to contact me with all your questions, concerns and topics you would like to see covered in future Pawling Record columns.
Judith “Judy” Albert is a Licensed Real Estate Salesperson for Berkshire Hathaway HomeServices Hudson Valley Properties in Pawling. Licensed in NY & CT, SRES, Relocation Certified. Email your questions to firstname.lastname@example.org
Call 845-855-8500 Ext. 301 or 845-283-7865. Visit my website at judy.albert.bhhshudsonvalley.com