HOME CENTER: Smart Owner
Be a Smart Owner
What about upkeep, once you move in your new manse? How about home additions and improvements? Our quick owner's manual will help you get the most from your house and your contractors.
May 31, 2007
May 25, 2007
7 deadly sins of remodeling
CHICAGO
(MarketWatch) -- The in-ground swimming pool is a huge asset to the
social lives of Greg Gabbard's college-aged children -- it's so popular
with them and their friends, their father wants to charge admission.
To Gabbard, however, the pool is one of the biggest home-investment
mistakes he has ever made. It's expensive to run the filter and
cleaning usually falls on his shoulders. Even worse, it may be working
against him in efforts to sell the house.
"Assuming I can sell this place, I will never have another pool," the 43-year-old said.
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Gabbard is convinced that the pool -- along with the high-maintenance
cedar siding on the house's exterior -- is the reason his four-bedroom
home in rural North Carolina didn't sell during a five-month stint on
the market last summer. Nearby Charlotte enjoyed a healthy real estate
market during the time, while Gabbard got a dozen lookers and no
takers.
His assumption is probably correct, said Holly Slaughter, brand manager
and consumer experience expert for RealEstate.com, a Web site that
provides information to home buyers and sellers. A pool often is a
deterrent for buyers, especially in areas where there are a number of
community swimming holes, she said.
People often don't want the hassle or the energy bill that comes along
with the feature. Moreover, most lenders don't include pools in their
mortgage appraisals so the investment doesn't get much bang for its
buck.
Homeowners can find plenty of information on which improvements will
help boost the value of their houses. But significantly less attention
is paid to what to avoid when remodeling your home, Slaughter said.
"Knowing the positive as well as the negative will make you a more
educated home seller and will give you an advantage and a leg up over
other home sellers in your neighborhood," she said.
Consider the following seven deadly home-improvement sins before
committing to projects that may work against you to lessen your resale
value.
1. Overexpanding
Keeping up with the Joneses is fine, but don't keep outdoing the homes
on the block with a procession of additions -- unless you plan on
staying put for a long while. A home that becomes conspicuously larger
-- and more expensive -- than those around it risks becoming difficult
to sell, Slaughter said.
Also keep in mind that additions tend not to return their entire
investment, according to Tom Stevens, president of the National
Association of Realtors. The 2005 "Cost vs. Value Report" by the
association and Remodeling magazine found that homeowners were able to
recoup 83% of the cost of a family-room addition and 82% of the cost of
a midrange master suite addition. An upscale master suite addition paid
off even less: On average, it recouped 80% of its cost at resale.
2. Making your home into something it's not
Don't change the general architecture or style of the home, and make
sure that renovations match. For example, a modern steel door doesn't
belong on a ranch house built in the 1970s, Slaughter said.
Changes that are obviously inconsistent with the style of the home
limit the number of people who will be interested in buying it, said
Michael Nagel, vice chairman of the National Association of Home
Builders' Remodelors Council. This is especially true for structures
such as the Frank Lloyd Wright house he's working on; it's relevant to
a somewhat lesser degree for a typical tract home.
3. Changing a room's functionality
Completely altering the purpose of a room is risky. So keep kitchens as
kitchens and bathrooms as bathrooms -- they were built that way for a
reason.
"We all expect basic functionality," Slaughter said. "If you start
changing the basic items that you expect out of your home, you're
really customizing it for yourself. It's not appealing to a wide amount
of the masses."
Even with the rising number of people who work at home, building up an
office also can be a negative, Stevens said. The National Association
of Realtors/Remodeling magazine study found that installing a computer
workstation, office storage and commercial carpeting -- as well as
rewiring the room for computer and fax use -- only produced an average
73% return on investment.
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.
"I wouldn't try and fix my own car, why would someone want to fix their
own house?" Nagel said. He frequently sees sloppy tile jobs, for
instance, completed by amateurs who should have contracted an expert
instead.
If you opt to hire a professional, get referrals from friends or family
members before going to the classified section of the newspaper,
Stevens said.
The National Association of Home Builders' Web site advises checking
professional candidates with local or state offices of consumer
protection and the local Better Business Bureau. Ask if the contractor
has received complaints and verify the company has appropriate licenses
and registrations.
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.
"People not only underbudget from a monetary point, but they also
underbudget time," she said. A prospective buyer walking through a home
isn't going to see the glass half full when a project is only half
complete.
Be conservative when budgeting, Nagel said. Expenses usually are added to jobs and rarely subtracted.
6. Making unnecessary renovations
When remodeling for resale, don't waste time with renovations that
won't pay off. If you must have a pool, it helps to install a new
patio, porch and alternative entry way, Slaughter said, but you still
may have to lower your expectations on who will be interested in
buying.
Proceed first with projects that are going to have the highest rate of return, experts advise.
In the last four annual editions, the National Association of
Realtors/Remodeling magazine study has identified four projects that
show the greatest return at resale: 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.
7. Neglecting regular maintenance
Don't forget proper maintenance and annual upkeep -- those may be the
most important improvements of all. Make sure the home is painted as
needed, clean the gutters to protect from water damage to the exterior,
trim shrubs and check for termites. Keep track of annual checkups and
use that as a selling point, Slaughter said.
"The little bit of money people spend to do annual maintenance saves them a lot of money in the end," Stevens said. 
