Every year, the National Association of Realtors publishes a cost value report. The graphic to the right is from their 2008 report. It is important to note that not a single item on the list has a return equal to its cost. That though doesn’t tell the whole story.
In years past, it was fairly easy for a buyer to access cash to complete renovations and remodels. Then equity lines and other sources of money got harder to acquire which then limits the buyer’s ability to take on a project house rather than a completed house. Even in the case of building sweat equity the buyer still has to be able to fund the materials cost.
The result is that we are seeing move-in ready houses sell faster than project houses. The question becomes what remodeling to do? The answer isn’t set in stone but here are my thoughts:
The house needs to be commensurate or better in relation to itself and its surroundings- avoiding extremes. If your gutters are falling off they need to be fixed but they don’t need to be copper gutters unless all the surrounding houses have copper gutters. Your buyer probably won’t pay more because its the only house on the street with copper gutters.
Looking at the house itself, what sticks out as not being on par with the rest of the property? The 1970s wall oven may function perfectly but it sticks out as being out of place in remodeled kitchen. I wouldn’t refinish wood floors if I wasn’t going to paint walls but you’ve also got to aware of the snowball effect of remodeling. If it sticks out and is viable to do something about it, do it.
In my opinion, adding a half bathroom to a three bedroom one bathroom house has more value than adding a full bathroom to a four bedroom two bathroom house even if the projects cost the exact same amount. There is less return as you get away from minimums (adding a second garage space does not have the return of adding the first).
You need to address what you want versus what the buyer wants. That really cool customized space for your wigimillwallit is really cool but only cool for your wigimillwallit. If you are going to get years of enjoyment out of it before selling, go ahead and customize it but don’t be hurt when the buyer conveys the first thing they are going to do is rip out your wigimillallit holder. It is not a selling point for most. Do you need to remove it before selling? Pools are similar. Great if you want a pool but not everyone wants a pool.
Everyone has their own opinions and needs. The reason brokers are so fond of Realtor Beige (also known as Latte, Cashew or light brown) is that its pretty noncontroversial. The buyer probably isn’t going to lovvvve it but they probably wont haaaaate it either and ask, “why the hell they do that?”. Then again, it’s just paint.