The average homeowner
doesn't have to take many steps past the front door
before 'the list' grows. Whether the latest to-do entry
is small, such as replacing a ripped window shade, or
a grand dream of a master bath suite, two things are
certain in the land of homeownership: There's always
something else to be done, and it'll cost you.
With more involved
projects in mind -- and perhaps backed up by piggybank-busting
estimates -- you may start to wonder if it will all
be worth it in the end.
home's worth is one way of attacking the equation. On
average, don't put more than 20 percent of a home's
value into improvements on the home, most industry experts
been hesitant to endorse averages because every house
has its own story," says Gregg Hicks, director
of marketing for Reliableremodeler.com.
From the age and
condition of the home to what the Joneses of the neighborhood
have done, there are a lot of factors to help in deciding
how much work may be necessary and, likewise, what would
be considered going overboard.
In 2005, Dan Fritschen,
author of "Remodel or Move?" and founder of
site by the same name, surveyed 5,000 homeowners
who felt underserved by their current living quarters
and found that one-third of those who intend to remodel
will spend 30 percent of their home's value on the project.
One of custom home
builder Bob McLemore's current projects is providing
$285,000 in additions and remodeling to a home valued
at $200,000 before the project began. Located in a rural
area, the house has appreciated nicely, says McLemore,
founder of the Charlotte, N.C.-based firm HouseRaising.
Better or bust
So what does it take to get
a thumbs-up on improvement spending from the experts?
Neighborhood knowledge. Consider the highest priced
home as a limit.
"You can improve up to that
level," says Fritschen. "Going over that is
strictly quality of life." In other words, you'd
better enjoy that fourth bathroom and natural stone-surrounded
pool with waterfall if nearby houses have no such amenities.
Or, as Becky Nelson, senior loan
officer for Opteum Financial Services puts it, if you
want $50,000 in custom landscaping while your immediate
neighbors are struggling to mow their lawn, that's fine.
But when you move, you're not getting the $50,000 back.
That is especially important to
remember with tract-type neighborhoods, McLemore says.
A house that's not "normal," even in a good
way, won't rebound from the costs of improvement. On
the other hand, a home in an older, in-demand neighborhood
is more likely to grow in comparable value as improvements
As for the work-with-what-you've-got-or-build-an-addition
decision, consider a calculation from Dean Bennett,
president of a Colorado-based design and construction
firm, who says adding square footage often makes good
sense: Divide the total cost of the addition by the
number of square feet added and then compare that number
to the cost per square foot of what homes in the area
are selling for. For example, a $75,000 addition of
400 square feet would cost $187.50 per square foot. Compare that figure to the cost of a
square foot in comparable houses in the neighborhood.
Still, Bennett says, "Determining
if home improvement projects are worth it is more often
about making things more livable for the homeowner."
Posted: April 12, 2006