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Steve McLinden, the Bankrate.com Real Estate AdviserAvoid costly updating when selling your home

Dear Real Estate Adviser,
My husband wants to replace the carpet in the bedrooms and put a hardwood floor in the downstairs living area in the hopes of helping sell our home. Is this worth the money?
-- Tory

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Dear Tory,
As much as I hate to cast doubt on the logic of a fellow homeowning male, you probably should tell him gently that he just might be ever-so-slightly in error, while adding that he is quite wise to be thinking in terms of "home improvement" at this juncture. Or -- depending on his sensitivity level -- the use of the term "lunkhead" may be substituted. But I kid.

Professional remodelers, however, will tell you that replacing old or damaged flooring with much better flooring might make the place look spiffy, but it is very costly and is not what floats the boat in the minds of potential buyers. On the other hand, minor cosmetic improvements to your home's facade, such as a new coat of paint, and to your landscape, such as flowers, plants and shrubs, are not awfully costly, and they're much more apt to increase your house's marketability and not become a huge losing proposition for you.

The highest average returns on remodeling costs, according to the latest survey by Remodeling Online, are an upscale siding replacement (103.6 percent), midrange bathroom remodel (102.2 percent), minor kitchen remodel (98.5 percent), midrange siding replacement (95.5 percent) and midrange two-story addition (94.6 percent). By contrast, bedroom and living room remodels, which would include the new flooring your hubby is talking about, returned less than 85 percent of costs. In other words, if you put $5,000 into new carpets and hardwood flooring, it would increase the value of your home by less than $4,250.

If your carpets are really that bad, consider replacing them with the least expensive flooring that you, or your agent, feel is acceptable for a home in your price range and neighborhood. Adding lustrous, expensive carpeting or shiny new hardwood floors will certainly help your place show well, but you will probably lose money in the long run. Besides, home shoppers often have very specific tastes in carpet color and other flooring, and who's to say your choices will jibe with theirs? It's not unusual for both the buying and selling parties in a transaction to come away from a transaction muttering to their spouses or partners, "Well, there's no accounting for taste!"

About the only thing worse than losing money by replacing carpet at a loss is finding out that the new owner ripped it out two weeks later and tossed it on the trash heap.

It's important to note here that the amount recouped from any remodeling effort is also contingent on the location and overall condition of a house, the rate of its appreciation, and the pricing and layouts of similar for-sale homes nearby. For instance, if a home seller doesn't have a second bathroom, and every other house in the area does, then a bathroom addition might pay off a little better than the average return of 86.4 percent, as estimated by Remodeling Online.

In your case, Tory, shampoo those carpets or replace them with something tasteful but inexpensive -- and in a neutral color -- if you must. But save the big money for something with a better payoff.

To ask a question of the Real Estate Adviser, go to the "Ask the Experts" page, and select "buying, selling a home" as the topic.

Bankrate.com's corrections policy -- Posted: Sept. 30, 2006
Read more Real Estate adviser columnsAsk a question
 RESOURCES
Remodeling room by room
Top 5 projects to boost home's value
Improvements that can lower capital gains
 TOP REAL ESTATE STORIES
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