Remodeling – Should you…or Shouldn’t you?

As a Seller in today’s competitive market, you need to find a way for your home to stand out above the rest. After all, your goal is to sell your home for the best price possible and in the shortest amount of time.

Remodeling is fast-becoming the most popular option for achieving optimal sale prices and timeframes. So how do you know if they money you intend to spend fixing up your home will make enough – or any – difference in your home sale price? It may seem like a game of chance, but there are some steps you can take to make an educated decision – should you or shouldn’t you?

Don’t assume that any renovation is a good one – or that you even need renovate at all. Many people believe that if you improve your bathrooms and kitchen you’ll be assured a higher price – that may be true – but will you end up spending more than you recoup? There are several factors that come into play – for instance, how much time will there be between remodeling and listing? If you renovate in the same year you sell, you may not get your construction investment back. If you wait a couple of years, the story may be different.

So before calling an architect and a contractor, or heading out to the local “do it yourself” home store, do some additional digging:

• Visit homes in your area that are for sale. How much are they asking and what do they have to offer? What do the higher priced homes have that your home may not have – new baths, additional baths, new kitchen, additional rooms, improved exteriors, etc.

• Work with a REALTOR® who knows the homes in your area. Get their advice on what areas of your home may need improvement. Be sure they know your home sale goals.

• Consider your home as a whole. You can put in a new bathroom, but if the rest of the house is in poor shape, your small renovation project may not make a difference.

• Consider the market. Is your home is located in a slow-market or a rapidly rising market location? Is there a lot of new building going on and how many existing homes are on the market? If you’re in a slow-market, adding an extra bathroom may get your home sold more quickly. If you’re in a rising market, you’ll most likely get more value out of any renovations you undertake.

• Consult a contractor. Find out how much the projects you are considering will cost –make sure to include not only materials and labor, but also permits, inspections, etc.

Ultimately, the deciding factor comes down to the cost versus the value added. Does it make sense to remodel your home before selling it? Once you’ve done your homework, you’ll be able to make the best decision possible.

Take a look at this chart of remodeling resale values for an overall view of costs recouped and rankings of renovation areas in 2005:

*Resale values recouped are aggregated from estimates provided by members of the National Association of Realtors. 20,000 appraisers, sales agents, and brokers were polled. Data is based on the 1,600 (8%) responses received.

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