After your career, your house is probably your most valuable asset. As such, you want to take steps that improve it's value (such as completing cheap landscaping tricks like adding your own rose garden, keeping your house properly repaired or making needed improvements) and you certainly don't want to do anything to decrease its worth. But, you may inadvertently do just that.
Imagine this scenario: You want to make some remodeling changes to your house so you can enjoy it a bit more. In addition, you think the additions will increase the value of your house. So you go ahead, invest a substantial amount of money, and have the changes done. Then, you find out that the changes actually lower the value of your home. Yikes! You just spent a ton of money AND lost value on your house! Not a great financial move at all.
So what are the house remodeling "improvements" that can lower your home's value? Here are seven of them as suggested by Market Watch:
1. Overexpanding. A home that becomes conspicuously larger -- and more expensive -- than those around it risks becoming difficult to sell.
2. Making your home into something it's not. Changes that are obviously inconsistent with the style of the home limit the number of people who will be interested in buying it.
3. Changing a room's functionality. Completely altering the purpose of a room is risky.
4. Doing it yourself -- when you shouldn't. Be extremely confident you're capable of taking on a project before attempting to do it yourself.
5. Underbudgeting. Don't underestimate how much projects will cost. Homeowners routinely make that mistake and end up 20% to 30% off in their budgets, Slaughter said.
6. Making unnecessary renovations. When remodeling for resale, don't waste time with renovations that won't pay off. Proceed first with projects that are going to have the highest rate of return, experts advise.
7. Neglecting regular maintenance. "The little bit of money people spend to do annual maintenance saves them a lot of money in the end," Stevens said.
In addition, the piece lists the four projects that show the greatest return at resale as:
Improvements to siding, windows, kitchens and bathrooms. In the 2005 study, a midrange bathroom renovation paid off with an average 102% return on investment and an upscale bathroom renovation recouped 93% of its cost. A midrange kitchen renovation recouped 91% of its cost on average, and an upscale kitchen recouped 85%. A minor kitchen remodeling job returned 99% of its cost.
We haven't done much in the way of improvements to our house since we moved in almost seven years ago. At that time, we had the whole outside and inside re-painted and new carpet installed. A year or so later, we had new flooring put into a couple of the bathrooms. That's about it. We really don't have a need for anything new, so why do it?
I would like to get a shed, though. Our garage is just too crowded with all the lawn equipment, toys, bikes, etc. -- I have to do a sophisticated limbo move every time I want to get into or out of my car. Not sure if we'll get one this year or wait until next. It's a topic of discussion in our household currently. ;-)
I was faced with what seemed to be a big project in replacing siding around the house, but with my wife expecting twins I couldn't afford the money or the time to put into it. I decided to put a coat of paint on it and go from there. After the paint and some minor repairs the house came out looking quite nice and it will get me a few more years to financially plan for the bigger project. This project took the better part of two days to complete and for just under $200.00 I feel like I got a new home!
Posted by: Jared Franz | July 12, 2006 at 10:34 AM
what is the best way to handle getting a home repair on a home you are in a contract to buy and seller wants to know if you will go in half with the cost of a bathroom tub for instance after the contract is made and you didn't know ub may need replaement after appraiser says they the seller needs to replace floor?
Posted by: judieth cain | July 12, 2006 at 12:27 PM
We are interested in renovating one of our renatl units into a livable home for ourslevles. We are not sure how to finance this venture. We owe $43,000 and would like to gut the house an rewire with a new kitchen, 2 1/2 bath, master bedroom, 2 upstairs bedrooms, family room, mud room, dinning room, and 2 1/2 car detached garage. How would we finace this? Would it be better to finance it in stages of completion? Thank you. Susan
Posted by: susan | January 20, 2009 at 10:15 PM