Thursday, January 19, 2006

How Home Improvements Affect Home Value

If you're looking to sell your home some time in the near future, you might wonder if you should do home improvements and if the money you spend on home improvements will affect the asking price for your home.

Figuring out how much the cost of a home improvement will raise your home value is not an exact science. It's universally true, however, that you will not immediately get back 100 percent of an investment in home improvement. For example if you spend $10,000 on new siding for your home, that will not increase your home value by $10,000.

Trying to estimate your home value after improvements is a tricky business. Kitchen and bathroom improvements tend to have the highest percentage return, garnering around an 80 percent return on investment.

The average home improvement will give you around a 75 percent return when you calculate your home value.

If you're thinking about doing home improvements to increase the value of your home before you sell it, you should, first of all, have realistic expectations about how much those changes will increase the value of your home.

After that, you need to understand that major home improvements often don't pay off in the short term. It takes about two years for the overall value of your home to increase enough to completely pay for a big improvement.

If you want to sell your home quickly, focus on cheaper projects that will make an immediate difference in both the look of the home and the home's value. For instance, make improvements on things that you haven't maintained well. Give the home a new paint job, upgrade the landscaping or replace a damaged floor. These things will make a big difference in the amount you can ask for your home.

When contemplating home improvements, whether with a mind to selling your home or just for your own enjoyment, consider whether the improvements will make your home much larger or fancier than other homes on your street. You should try to keep your home within the range of other homes in your neighborhood or part of town. Otherwise it can be harder to sell, even if those improvements would normally increase the value of your home.

If you are thinking about selling your home, by all means make minor improvements that will make your home look better and more attractive to buyers. And if you aren't looking to sell soon, make all the improvements you want with the knowledge that it might take a while to translate those improvements into increased home value.

And if you even have questions about how to determine the value of your home, consult a qualified Realtor in your area.

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