It's the magic phrase uttered by almost anyone who's ever considered the cost of home remodeling: "We'll use our home equity and get it back when we sell."
Unless you keep those projects practical, though, you might just be kidding yourself.
Every year, Remodeling magazine looks at the hottest home upgrades and renovations and calculates just how much owners get back when they sell.
Upkeep is more popular than upgrades these days, says Sal Alfano, editorial director for Remodeling. These are the projects that often recoup the biggest slice of expenses at resale. But prices and returns do vary regionally, he says.
Ever wonder what brings the lowest return when you plant that "for sale" sign? Think high-dollar, high-end and highly personalized add-ons that make you drool. Like a totally tricked-out garage built from the ground up. Or a super luxe master suite addition. Or the home office redo designed just for you.
Here are the six improvements that, in their 2010 report, ranked dead last nationally when it comes to getting those renovation dollars back at resale.
HOME OFFICE REMODEL
Want to get an idea what today's office-away-from-the-office looks like? Walk into Starbucks.
These
days, a home office consists of a multiple-choice combination of wireless
laptops, smartphones, PDAs and touch-screen tablets. And that worker bee might
be toiling anywhere from a home patio or a favorite restaurant to a park bench.
The
standard home office renovation, meanwhile -- complete with plenty of built-in
storage and high-tech wiring -- is this year's biggest loser in the resale
value sweepstakes. Nationally, homeowners spent an average of $28,888 and can
expect to recoup about 45.8 percent at resale, according to the report.
Return
on investment doesn't reflect your enjoyment of the space, Alfano says.
He
offers two tips for home-office remodelers when they sell. First, opt for
something that can be easily converted back into a bedroom or den for (or by)
the next buyer.
Second,
when you're selling, call it a study, den or hobby room. "There's lots of
call for multipurpose space. Don't lock yourself into that one use,"
Alfano says. Don't use words that invoke images of actual work. Or the office.
BACKUP POWER GENERATOR
You see a backup generator and imagine all of the comforts no matter what the weather.
But
potential buyers hailing from outside your local area may not share that
vision. (And a handful of those who do might have watched too many zombie
movies.)
On
average, when homeowners have a heavy-duty backup power generator installed,
they spend about $14,718, according to the report. Going with a slightly less
expensive model or having a less complicated installation could cut the costs
significantly, Alfano says.
Average
amount of the price recovered at resale time: 48.5 percent.
SUNROOM ADDITION
Real estate agents will tell you that potential buyers want square footage, pristine condition and lots of light. So a brand-new room that has the word "sun" in it, it has to be great for resale value, right?
Not
necessarily.
Your
first clue: The word "addition" -- which means expanding the
footprint of your home -- indicates that this is not a renovation for the faint
of heart (or wallet). "It's one of the more expensive projects,"
Alfano says.
While
it seems simple enough, the national average for a sunroom addition is $75,224,
according to the report. Homeowners can expect to recoup about 48.6 percent
when they sell.
That
doesn't mean that adding a sunroom is always a bad move.
If
your home needs another common area, a sunroom could be the answer, says Katie
Severance, co-author of "The Complete Idiot's Guide to Selling Your
Home." An addition is best considered in the context of the whole home,
she says. "The doctor has to treat the whole patient. You have to look at
the house and say 'What's out of balance?'"
UPSCALE MASTER SUITE ADDITION
Who doesn't want to wake up in a five-star-hotel-quality suite with an attached spa bathroom and a kitchenette that affords you coffee and pastries before facing the world?
Once
you see the price tag, it won't just be the coffee keeping you up at night.
For
a super-deluxe master suite addition -- which adds square footage and uses only
top-dollar materials -- the average cost is about $232,062, according to the
report.
That's
460 nights at a posh resort with enough left over to raid the minibar.
In
years past, this project was "sort of a trend in vacation homes" that
migrated to primary dwellings, Alfano says. Sellers can expect to recover about
52.7 percent at resale.
Your
buyer can purchase a newer house with the same features as part of the original
floor plan that "probably lays out better anyway," says Loren Keim,
author of "How to Sell Your Home in Any Market."
So
while the next buyer may appreciate your luxury accommodations (which could
even tip their decision in your home's favor), chances are they won't want to
pay the full tab for your remodel.
BATHROOM ADDITION
Unless you're a hermit who never entertains, you've probably wished for an extra bathroom now and then.
But
bathroom additions require serious coin. For a moderately outfitted addition
with synthetic stone or plastic laminate surfaces, figure parting with about
$21,695, according to the Remodeling report. Go upscale, with finishes like
premium marble or fine tile, and you can easily spend in the neighborhood of
$40,710.
Either
way, you get about the same return: 53 cents on the dollar. "In the buyer's
mind, the additional bathroom isn't worth that additional $20,000 to
$40,000," Keim says.
Investigate
a less-expensive way to get the same result without flushing quite as much
cash. While additions usually cost more, pros might be able to reconfigure your
existing space to add a bathroom for less, Alfano says.
UPSCALE GARAGE ADDITION
Instead of cleaning out the garage, how much would you pay to have a new one built from scratch?
This
time, it would have all the organizational built-ins, and a durable,
easy-to-clean floor to ensure it would never be messy again. And windows for
natural light.
Oh
yeah, and you could store a couple of cars in there, too.
The
price tag for a top-of-the-line detached two-car with all the trimmings is
about $90,053, according to the report. You can expect to recover about 53.6
percent of that when you sell.
"This
one is completely decked out on the inside," says Alfano. "It's a
dream garage."
And
that's likely some of the problem with recovering the value at resale. Says
Keim, "You've got a very small target audience out there that wants an upscale
garage."
Read more: http://www.bankrate.com/finance/real-estate/6-worst-home-fixes-for-the-money-1.aspx#ixzz2aeWw6FEH
