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Answers (11)
- Netizen
- Contributions:33
The trouble with remodelling is buyers are either sold on the remodel (because you luck out and they like your taste), they do not purchase it (because they can't get you to lower the price enough for them to trash the remodel and start from scratch), or they buy the home and remodel it (wiping out your investment in remodeling).
The moral of the story is that all buyers aren't willing to pay for remodel luxuries, they are fickle on style, they don't necessarily appreciate Sub-Zero appliances and the implication they're paying through the nose for these unwanted luxuries, and sometimes they simply want a "clean palate" to paint their own domestic picture.
The long and short is the home must be like a beautiful canvas where the "artist" (buyer) can "paint" their own picture of domestic bliss and tranquility. New but basic inexpensive appliances allow them to "throw away" these (donate to Goodwill perhaps?) and remodel. Nice functional countertops NOT costly materials they may feel guilty replacing, thereby creating a psychological conundrum that ends in not buying (or shamelessly low-balling the price figuring they have nothing to lose). This is human psychology 101 in a recession, folks, not 1999 before the dot-com bust when expensive countertops and Sub-Zero were all the rage (because money flowed endlessly, so what if you donate the Sub-Zero appliances to Goodwill or pay through the nose in a bidding war with another buyer.
Make sure to market the fact you left out expensive remodelling, opting for QUALITY where it counts: quality roof, energy efficiency in every respect, quality plumbing in pipes and fixtures, all appliance amenities to allow buyer to comfortably settle down before remodelling (without getting carried away on fancy name brands that buyers may or may not want). Ask yourself if YOU were buying this home, and you understood the buyer's approach was to allow you flexibility in remodelling, what would you look for? Then price the home to reflect the austerity approach so buyers clearly see they can afford to remodel it according to their unique dreams.
I have turned down home after home because I said to myself, "Gee, if I liked such and such design, color, and these particular expensive amenities, I might consider buying this home! Too bad this is not my taste! I just don't have the stomach to tear out these amenities and start remodelling from scratch."
Another approach is to agree to specific appliances, countertops, bathroom designs, and so forth, once the contract is signed (and deposit to cover the remodel is received). I dunno, that's a lot of hassle that could backfire if it creates confusion and procrastination in a buyer that may be ready to pull the trigger on closing without any "incentives."
The moral of the story is that all buyers aren't willing to pay for remodel luxuries, they are fickle on style, they don't necessarily appreciate Sub-Zero appliances and the implication they're paying through the nose for these unwanted luxuries, and sometimes they simply want a "clean palate" to paint their own domestic picture.
The long and short is the home must be like a beautiful canvas where the "artist" (buyer) can "paint" their own picture of domestic bliss and tranquility. New but basic inexpensive appliances allow them to "throw away" these (donate to Goodwill perhaps?) and remodel. Nice functional countertops NOT costly materials they may feel guilty replacing, thereby creating a psychological conundrum that ends in not buying (or shamelessly low-balling the price figuring they have nothing to lose). This is human psychology 101 in a recession, folks, not 1999 before the dot-com bust when expensive countertops and Sub-Zero were all the rage (because money flowed endlessly, so what if you donate the Sub-Zero appliances to Goodwill or pay through the nose in a bidding war with another buyer.
Make sure to market the fact you left out expensive remodelling, opting for QUALITY where it counts: quality roof, energy efficiency in every respect, quality plumbing in pipes and fixtures, all appliance amenities to allow buyer to comfortably settle down before remodelling (without getting carried away on fancy name brands that buyers may or may not want). Ask yourself if YOU were buying this home, and you understood the buyer's approach was to allow you flexibility in remodelling, what would you look for? Then price the home to reflect the austerity approach so buyers clearly see they can afford to remodel it according to their unique dreams.
I have turned down home after home because I said to myself, "Gee, if I liked such and such design, color, and these particular expensive amenities, I might consider buying this home! Too bad this is not my taste! I just don't have the stomach to tear out these amenities and start remodelling from scratch."
Another approach is to agree to specific appliances, countertops, bathroom designs, and so forth, once the contract is signed (and deposit to cover the remodel is received). I dunno, that's a lot of hassle that could backfire if it creates confusion and procrastination in a buyer that may be ready to pull the trigger on closing without any "incentives."
- John Wurster, "John Wurster"
- Contributions:34
This is an age-old question and depends greatly on current market versus when you plan on selling, as well as the current construction costs in your aarea. You should start by getting current "comps" of 2BR/2BA homes in your area and then do comps as your home would be with a new addition (i.e. 3BR/3BA). If your home is in a neighborhood of predominately 3 and 4 bedroom homes, and as a result, your 2BR is heavily discounted, you may realize more return on your dollar.
Another way to look at this is if you take the current value of your home, and add the cost of the addition/improvements, where will that put your home's value (assuming dollar for dollar). If that's greater than the average sales price of homes in your area, you are less likely to see any returns. Typically, you can get more return on your dollars if you improve a small home that's located in a highly desireable area. For example, if your home was on a lot overlooking Mission Bay and amongst many $800,000 homes, you might well benefit from an addition - especially if you can enjoy it yourselves for some years prior to selling. It's not absolute that you won't get back what you spend. With that said, most research will indicate only a fractional return on your dollars (often in the neighborhood of 70% on a smartly done improvement).
Another way to look at this is if you take the current value of your home, and add the cost of the addition/improvements, where will that put your home's value (assuming dollar for dollar). If that's greater than the average sales price of homes in your area, you are less likely to see any returns. Typically, you can get more return on your dollars if you improve a small home that's located in a highly desireable area. For example, if your home was on a lot overlooking Mission Bay and amongst many $800,000 homes, you might well benefit from an addition - especially if you can enjoy it yourselves for some years prior to selling. It's not absolute that you won't get back what you spend. With that said, most research will indicate only a fractional return on your dollars (often in the neighborhood of 70% on a smartly done improvement).
- Robert Walker, "So Cal Agent"
- Contributions:1425
Correction:
Due to Prop 13, the county will only be allowed to raise the value of your home up to 2% per year, if you are sitting at a low value and you do something to retrigger the assessment "it will not effect you like it will" in the future when values are up, that improvement can become very expensive when you add in the cost of the extra taxes you will be paying (assessments will be based on the entire house, not just the improvements).
Due to Prop 13, the county will only be allowed to raise the value of your home up to 2% per year, if you are sitting at a low value and you do something to retrigger the assessment "it will not effect you like it will" in the future when values are up, that improvement can become very expensive when you add in the cost of the extra taxes you will be paying (assessments will be based on the entire house, not just the improvements).
- Robert Walker, "So Cal Agent"
- Contributions:1425
I recommend that if you are going to go forward with this, you better do it now while housing is down. The reason is, if you cause the home to be reassessed due to the new construction, it is better to be reassessed at your current assessed value than to be assessed when values are high and have to pay the new assessed value until the next real estate crash (To add on for the short term wouldn't really pay you back and could have a negative impact on your part).
Due to Prop 13, the county will only be allowed to raise the value of your home up to 2% per year, if you are sitting at a low value and you do something to retrigger the assessment in the future when values are up, that improvement can become very expensive when you add in the cost of the extra taxes you will be paying (assessments will be based on the entire house, not just the improvements).
You may want to take in consideration in what S.G. said also, he added to his house while homes were at their peak, so he will have to wait until homes return to that value to get his investment back. You, on the other hand, are at the bottom, or very close to it. Many will argue back and forth where we are in the current market, but we are entering the selling season now and we should see some increases in sales and values in homes coming up.
When the market returns, your improvement will add value to your home and you will profit from the remodel as long as everything was permitted and it doesn't become an eyesore from poor design in which will actually cause the home to loose value.
A carefully planned professional addition is a great idea in this market. Plus their are many contractors that are able and willing to negotiate to get the job at a price you will not see when the housing market recovers and everyone is begging for contractors to do the work.
- Cory La Scala, "San Diego CA Realtor"
- Contributions:419
This depends on if you plan on selling soon, or living in and enjoying your home for awhile. You won't get back the dollar amount you spend in value; many sellers have tried. For pure value, I'd go with a kitchen makeover, maybe a refacing if the general layout and functionality of the kitchen works, then maybe a consultation with an architect/general contractor to see if you can get a third bedroom into your 1,600 square feet, without it looking funky or creating an awkward flow. You already have two bathrooms, so you're probably good there.
You don't have to go modern with your kitchen, there are many great "new" looks that will work beautifully. Think craftsman, shaker and wainscot. There are lots of options that don't have to cost an arm and a leg.
There's a home show at the Convention Center next weekend to give you some ideas; I saw it in the Sunday paper today. It would be a great place to get some detailed questions answered too!
- Steven G. Hinton
- Contributions:98
I added a bedroom, bath and 300 square feet to a home in 2005. Prior to the addition the home was worth $655,000. The addition cost about $50,000. Now with the addition the house is worth less than $399,000.
Unless you can do the addition at a genuinely wholesale cost you are not going to profit from an addition.
Unless you can do the addition at a genuinely wholesale cost you are not going to profit from an addition.
- Gershon Alexander, "Gershon Alexander"
- Contributions:60
I would get area comps and see if the increased square footage that you are adding make a difference in the sale price
- Bradley Slavens, "Slavens Realty"
- Contributions:14
I heard that the highest return on investment is painting your front door? I personally have not seen many good room additions because it changes the dynamic of the whole house. Either the roof line and layout looks wacky or there are stairs in the strangest places, etc. If I had to pick one I would do a cosmetic very limited (like paint) "maintenance " of the kitchen. Even a nice looking modern kitchen in a vintage house looks strange to me and doesn't flow. What I would do? - if you want a three bedroom, rent yours out or sell it and buy a three bedroom. If you want a modern kitchen, buy a house with a modern kitchen. Bottom line remodels become a matter of taste for buyers but everyone likes a clean well maintained house.
- wetdawgs
- Contributions:26854
Is your goal to add liveability for you and your family, or is your goal to increase house cost? Neither kitchen nor room addition will add a dollar for dollar increase in the home costs. Either or both could increase the ability to sell the home. 2 bedroom homes are often overlooked in the purchase process.
- Candi Randolph, "Candi Randolph"
- Contributions:35
I would recommend a cost effective kitchen remodel to add value to your home in the eyes of a prospective buyer.
Replace counter tops, re-face (or perhaps replace) cabinets, new tile back splash, update appliances and lighting, consider new flooring if your current floor material is worn or outdated, a fresh coat of paint...do what is needed in your kitchen, leaving the current layout intact.
And, you don't have to select the most expensive material to create a beautiful kitchen. There are many choices in moderately priced materials that will provide a great result.
Two more suggestions:
1) Keep the choices relatively neutral, and
2) Don't skimp on the labor and installation. Hire a qualified installer so the result is clean and professional
Replace counter tops, re-face (or perhaps replace) cabinets, new tile back splash, update appliances and lighting, consider new flooring if your current floor material is worn or outdated, a fresh coat of paint...do what is needed in your kitchen, leaving the current layout intact.
And, you don't have to select the most expensive material to create a beautiful kitchen. There are many choices in moderately priced materials that will provide a great result.
Two more suggestions:
1) Keep the choices relatively neutral, and
2) Don't skimp on the labor and installation. Hire a qualified installer so the result is clean and professional
- John Stewart, "nwhome.us"
- Contributions:2166
Very rarely will the cost of an improvement equal the increased value.
You can find some examples in the Remodeling Magazine's Cost vs Value report for your region.
You can find some examples in the Remodeling Magazine's Cost vs Value report for your region.
Will the increase in home price after a room addition worth the cost of the addition?
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