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Home Improvements That Pay For Themselves
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Home Improvements That Pay For Themselves
Tips to increase the value of your most valuable investment

  • Read why exterior remodeling pays off
  • See what are the most valuable home improvements
  • Learn how you should stage your home

    The second-home buyers have certain demands that not necessarily match the rest of the market. Gayle Hood, an agent for Alice Donahue Real Estate in South Padre, says that buyers in her market are interested mainly on the views from the property than anything else. If your property does not currently have a view of the water you can add a higher deck or balcony that may have access to a view.

    Curb appeal is also important and in South Padre Island tropical landscaping is key. People want to feel like they are on a resort with palm trees and other tropical plants surrounding the property. Patio areas or outdoor entertaining areas are also important for second home buyers. A deck or big balcony will add appeal to your property.

    Even though people may live steps from the beach, a pool is always in high demand. Having a pool may help sell your property faster, but you need to be aware that you may not be able to recover the pool costs. If your family plans to use the property for several years before deciding to sell, adding a pool may be worthwhile.

    In the interior of the house buyers are looking for open floor plans. They like the kitchen, dining and living room to be one open area for a more casual living style. Because the kitchens are the main place people gather, their looks and utility are very important. Granite countertops and stainless steel appliances are big with second home buyers. If you’re planning to upgrade your kitchen by adding granite, consider changing the cabinet doors. Many times sellers think the granite countertop alone will add more value, but if the cabinet doors and hardware look worn the granite will not be sufficient for the buyer. A granite upgrade will definitely help your condominium to stand out among others that have not had changes done.

    Normally wooden floors are very attractive in a home, but according to Gayle, buyers from her area are not interested in wooden floors. The humidity and the sand make it difficult to maintain. Usually they look for tile throughout and will place area rugs in different parts of the house. If wooden floors are essential for your home, consider a bamboo floor since it will withstand humidity better and it’s a much stronger type of floor.

    It is definitely a buyer's market out there, but here are some more things you can do to better your odds.



    When It Comes to Remodeling, It’s What’s Outside That Counts, Realtors® Report

    Many buyers judge a house by its exterior, or so it seems from the results of the 2007 Remodeling Cost vs. Value Report . Three of the four projects with the highest national percentage of costs recouped this year were exterior upgrades.

    The most profitable project on the national level was upscale siding replacement, recouping 88 percent of costs upon resale. Wood deck additions and wood window replacements also returned more than 80 percent of costs, at 85 percent and 81 percent, respectively.

    On a national average, the only interior project to return more than 80 percent of remodeling costs this year was a minor kitchen remodel, returning 83 percent of project costs at resale.

    “The results of this year’s Cost vs. Value report underscore the importance of curb appeal in the buyer’s eye,” said NAR President Dick Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif. “Realtors® know what attracts buyers in their local markets and can help your house put its best façade forward, so to speak – it’s another way Realtors® add value to the real estate transaction.”

    The 2007 Remodeling Cost vs. Value Report compares construction costs with resale values for 29 midrange and upscale remodeling projects comprising additions, remodels and replacements in 60 markets across the country. Data are provided for nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 10th consecutive year that the report, which is produced by Hanley Wood, LLC, was completed in cooperation with REALTOR® Magazine, as Realtors® provided their insight into local markets and buyer home preferences within those markets.

    Four new projects were added this year: the aforementioned wood deck addition, a back-up power generator, and both a midrange and upscale garage addition. Nationally, the back-up power generator only returned 58 percent of the investment on resale, although the return was highest in the West South Central region, which comprises Arkansas, Louisiana, Oklahoma, and Texas, at 68 percent. Buyers in the Pacific region of Alaska, California, Hawaii, Oregon and Washington value their garages: The midrange garage addition returned nearly 70 percent nationally but 88 percent in this region, while the upscale garage addition returned approximately 65 percent nationally but 78 percent in this area.

    Homeowners in the Pacific region could also expect to see some of the highest percentages of remodeling expenses returned at resale, with 13 of the 29 projects returning 90 percent or higher of project costs. Homeowners in the East North Central region of Illinois, Indiana, Michigan, Ohio and Wisconsin might expect some of the lowest returns; only one project – upscale fiber cement siding – returned more than 80 percent upon resale (82 percent of costs recouped), while nine projects returned less than 60 percent of project costs.

    The least profitable projects were a back-up power generator, sunroom addition, and home office remodel. The back-up power generator returned the lowest percentage of initial cost in the East North Central, New England (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont), Pacific, and West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) regions.

    Sunrooms are least popular in the East South Central (Alabama, Kentucky, Mississippi and Tennessee), Mountain (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico and Wyoming), and West South Central regions. Home office remodels return the lowest percentage of project costs in the Middle Atlantic (New Jersey, New York and Pennsylvania) and South Atlantic (Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia) regions.

    Gaylord explained that the resale value of any given remodeling project depends on a variety of factors. “When considering a remodeling project, particularly with an eye toward resale, it’s important to evaluate your home’s current condition, how the project will change the existing space in your home, as well as how your remodeled home will compare to other homes in your community,” said Gaylord.

    “For example, using a breakfast nook to expand the kitchen seems like a good use of space, but using the same space to add a first-floor bathroom in an older home that doesn’t have one will draw more buyers,” Gaylord said. “Realtors® see hundreds, if not thousands, of homes every year with their buyer clients and can provide valuable insight into what projects and improvements will make a difference with buyers in your area.”

    Results of the report are summarized in the December 2007 issue of REALTOR® Magazine. To read the full project descriptions, access national and regional project data, and download a free PDF containing data for any of the 60 cities covered by the report, visit www.costvsvalue.com . “Cost vs. Value” is a registered trademark of Hanley Wood, LLC.

    Hanley Wood, LLC, is the premier media company serving housing and construction. Through four operating divisions, the company produces award-winning magazines and Web sites, marquee trade shows and events, rich data, and custom marketing solutions. The company also is North America’s leading provider of home plans. Founded in 1976, Hanley Wood is a $240 million company owned by JPMorgan Partners, LLC, a private equity affiliate of JPMorgan Chase & Co.

    The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

    The Most Valuable Home Improvements

    If you're thinking about putting your house on the market, or if you want to remodel now with modifications that will pay off when you do sell, you should know what improvements will give you the greatest return on your investment.

    No matter how strong or weak the market, making the right home improvements that will add equity to your house is a simple matter of knowing what buyers really value. That's hard for many homeowners because they tend to overvalue their own properties and make improvements that fit their personal tastes. Real estate experts agree that there is a system to making the right home improvements to encourage the sale of your house or increase its value. It comes down to three factors: understanding how much you must spend, setting realistic expectations about how much you will recoup for each improvement after the sale and determining the right improvements to make. Based on these results, you can make additions that are highly desirable and profitable when you sell your home.

    Curb Appeal
    The number-one area for improvement is curb appeal because how you present your home from the outside forms the first and most lasting impression with potential buyers. According to Remodeling magazine's "Remodeling Cost vs. Value Report 2006," the project that will bring the highest return on your investment is new vinyl siding. Nationwide, homeowners can expect a huge return on high-quality, low-maintenance vinyl siding. For homes that can benefit from higher-cost, upscale building products, like foam-backed vinyl siding, the return approaches 90 percent.

    Like siding, replacement windows add to curb appeal and speak to the quality of your home right from the street. New windows are sharp-looking, energy-efficient and easy to operate. They add to your home's equity and are second only to new siding in return-on-investment.

    In terms of additions that bring a big return, adding a second story if you have a one-story home is worth the investment. The project itself may be daunting, but its impact is huge. Likewise, a new deck improves the exterior appeal of the home and adds outdoor living space. To capitalize on this asset, realtors suggest staging the deck with furniture, a grill and potted plants.

    Best Upgrades for Interior Space
    Bathrooms are still the number-one place to recoup expenditures in your home. Half-baths are very important in public living areas of the home. If you do not have a guest half-bath, the investment of adding one will certainly bring a return when you sell the home. Realtors advise that you treat this room as a visitors' space with high-end finishes and furnishings. Another popular bath addition is the secondary half-bath, or the family half-bath, which is different from the half-bath used primarily for guests. It is usually located near the back of the house or off the kitchen. Unlike the guest half-bath, this space should be practical for washing up after play or yard work with easy-to-clean finishes and flooring.

    If you plan to remodel or upgrade an existing full bath, realtors warn that you should beware of fancy fixtures or finishes, especially in gold or brass, because they may go out of style and appear dated. When upgrading your shower, consider an oversized shower with a rainhead instead of a spa tub. While tubs are luxurious, most families still want a shower where they can bathe quickly and a tub that is easy for bathing children.

    Improving your existing kitchen with a minor remodel is likely to bring a high return when you sell your home. Minor remodels include updating appliances, countertops and flooring as well as re-facing or replacing cabinets. Experts warn homeowners not to overprice the remodel or push it beyond the scale of the neighborhood. Granite or stone countertops and stainless-steel appliances are pricey trends that may not pay off in the long run.

    In the kitchen, as with all improvements, it's important to stay within the range of the homes around you. If the neighborhood does not have high-end finishes in most of its homes, you're better off selecting neutral finishes instead of pricing yourself out of the neighborhood. On the flip side, if the homes in your neighborhood all have high-end kitchens, you should upgrade to meet that baseline if you wish to get a comparable selling price.

    Creating New Space
    Adding a bedroom or family living area to an attic is a wise use of space and dollars. Not only does it make use of existing, unused space, it insulates under the roof and makes dead space energy-efficient. Improvements that are energy-efficient are selling features in all areas of the country. Attic rooms can also be versatile or multi-purpose spaces. A guest room, bedroom or teen gathering place can double as a craft room or office.

    A basement remodel is also a sensible use of your dollars. Like the attic, it's existing space waiting to be converted. The dollars spent to convert it are easily recouped in resale value. Buyers are looking for added family space and home theaters, which are easily accommodated in remodeled basements.

    When to Upscale
    The "Remodeling Cost vs. Value Report 2006" also shows results for high-end or "upscale" additions, remodels and replacements. While the general rule of thumb is to stay within the norm in terms of materials and finishes, it is important to match the baseline set by homes in your neighborhood, as mentioned above. While granite countertops may be upscale for some, they are the norm in many neighborhoods. Do your homework before you make decisions. If most of the houses in your neighborhood have wood windows, consider making the investment when you purchase replacement windows. Vinyl siding may not be compatible with your neighborhood architecture, but fiber cement or foam-backed vinyl may be an upgrade worth considering. Take a hard look at your kitchen and baths. You may need to do a major kitchen remodel in order to compete with homes in your area. The best way to determine the level of home improvement required for a successful sale is to visit the homes around you and study comparables. Then follow their lead.

    Beware of Personal Upgrades
    There are many improvements that enhance the property for the owners but serve as a liability when it comes time to sell. Pools are often a drawback at sale time. Again, base your improvements on the homes around you. If you live in an area where a backyard pool is the norm, it is probably a wise investment. If not, consider professional landscaping or a deck. Improving the look of your property always provides added value. Hardscaping—like pools, walls and sculptures—can be too personal for some buyers' tastes. A good rule of thumb is to ask yourself how long you plan to stay in your home. If the answer is 10 years, make the improvements that benefit your family. If you intend to stay 5 years or less, don't add high-end items like pools and spas.


    How to Stage a Home

    Staging your home sets the scene for potential buyers. A well-staged home can help it sell faster and for more money. Here are some basics for prepping your house.

    Much like detailing a used car prior to sale, staging a home allows it to put on its best face. Not to be confused with decorating, staging is about presentation, cleanliness and drawing positive attention to the space inside. According to StagedHomes.com, the web site for a unique program that provides certification and training to become an Accredited Staging Professional™ (ASP), 93% of homes staged by an ASP sell in less than 31 days. Home sellers can choose to do the staging themselves, take guidance from a qualified realtor or hire an accredited professional.

    Letting Go
    The first step when staging a home to sell is to cut emotional ties, which means temporarily living without your most precious belongings surrounding you. When the house is put on the market, it should be thought of as a product, not a home. Although you might still be living in it while it's for sale, it should not look that way to potential buyers. "The way that you live in your home and the way that you market it and sell it are two different things," says Barb Schwarz, author of Home Staging: The Winning Way to Sell Your House for More Money and recognized as one of the founders of the home staging industry. "Once your home becomes a house, it can become a product, and people want to buy the product that has the best wrapper." One way for the seller to be able to look at his home objectively is to take tours of homes for sale. "A walk through the neighbor's house can help the home seller to see things from the homebuyer's point of view," says Craig Schilling, founder of Real Estaging, a home staging company in Chicago.

    Selling the Space
    Part of letting go means packing up all unnecessary "junk." Anything that can be lived without should be packed up and either tucked away or put into storage. Put away knick knacks, memorabilia, superfluous furniture, lamps or anything else that adds to the home's clutter and distracts from what is really important—the space. "You're supposed to be selling the space, not the stuff," says Schwarz. "The value of the house is in the space." When potential buyers walk through an unstaged home, they tend to focus on everything but the space, particular in an overly cluttered home. A sparse, staged home is open, allowing the size of the rooms to be the main attraction.

    Packing alone isn't enough, however. The staged home must sparkle, and to do that will take some elbow grease and attention to detail. "A staged home needs to be Q-tip-clean," adds Schwarz. For the exterior of the home, cleaning can mean power-washing the siding, scrubbing and staining the deck, and taking down unsightly cobwebs. Inside the house, any dust, stains and scratches must go. Every corner of every room—from the windows to the baseboards—should be made to look new.

    Setting the Stage
    With clutter packed away and all the surfaces shining, homeowners should go through each room arranging furniture and configuration to best present the space. Also, each room should clearly look like what it's designed to be. "Make each room what it is," suggests Schwarz. "If it's a dining room, make it a dining room." Consider the focal points of each room, and arrange those focal points to accentuate space and function. In bedrooms, for example, the bed is the focal point. When a potential buyer stands in the doorway to look inside a bedroom, the bed should not block the view of the room or make the room look small. If certain rooms lack the necessary furniture to make them what they are, the homeowner might consider borrowing or renting furniture for staging purposes.

    Another investment worth making is in paint. Neutral and light colors will make a room look big, while dark walls shrink the size of a room. Furthermore, off-kilter colors and color combinations can make for a bad first impression of a home. The small investment in time and money to paint the walls can make the difference when it comes to time on the market and selling price.

    Hiring a Professional
    The home staging business is a fast-growing industry, and there are many who call themselves professional home stagers. Accredited staging professionals are typically members of the International Association of Home Staging Professionals and can be found by searching by ZIP code on both organizations' web sites. When hiring a professional home stager, homeowners should ensure that the professional is certified, as well as protected and insured. "Homeowners should call and meet two or three professionals," says Schwarz. "Home staging is about commitment, and homeowners should know that everyone involved is committed to the job." Home stagers can be hired to perform a range of staging services, from simple consultation to advise the DIY-stager to a complete "enhancement," where the stager might bring in his/her own props, furniture and artwork as part of the staging process.

    Additionally, more and more realtors are becoming staged-home-savvy. Many are choosing the ASP certification, while others are educating themselves on the ins and outs of the practice. When choosing a realtor to help sell the home, homeowners should inquire into staging experience and ask about rates. Although the cost to have a home professionally staged will vary by market, homeowners should expect to pay anywhere from $1,000 to $3,000. "Homeowners need to remember that they are not just paying for the props or the advice—they are paying for the actual time it takes to stage the home," says Schiller.

    Whether you hire a professional home stager or use the funds toward a DIY staging job, home staging is a worthwhile investment that will almost certainly sell your home quicker and increase your return on investment.

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