A home renovation is different than applying a fresh coat of paint, installing a new front entrance door, or staging your home to show to interested buyers. Depending on the extent of the renovation, you can spend a few thousands or tens of thousands of dollars.
Some people choose to take advantage of low interest rates, complete a mortgage refinance and remodel their homes. They intend to stay put for the next 15 or 20 years, which can be very rewarding experience. Other homeowners have decided to renovate their homes—increase the value even more—and sell.
Here are some considerations both homeowners will find helpful:
Review The Numbers
Whether you plan to remain in your home or sell, you should understand all of the numbers. This rings even more true if you intend to sell your home after you finish the renovation.
This experience requires you to pay extra attention to details because you will not have time to recover from costly mistakes.
Decide on the scope of the project and create a budget. Find out the current market value of your home from your real estate agent. A comparative market analysis can give you an idea of current pricing activities in you neighborhood.
Use this information to determine a listing price after the improvements and the amount of your home equity.
Calculate the total cost of renovation project, including not so obvious costs like your time and inconveniences. Add up the expenses associated with selling the property—real estate commissions, taxes, legal, and other charges.
Determine how much of your home equity you want from your home sales transaction after mortgage debt and costs have been subtracted.
Careful planning can help minimize surprises and guard against overspending on the project.
Control Renovation Costs
Avoid spending more than you can recoup when you sale create a budget for the project. Create a line for each phase of your renovation project—like new carpet - $4,000, new stove and refrigerator - $1,200, bathroom $3,000, etc.
There are usually components within every renovation project that you can refurbish instead of replace. Instead of installing new cherry hardwood floors, consider repairing and refinishing the existing hardwood.
If you cannot recoup your investment when you sell, you rethink the amount of funds allocated toward each item on the renovation list. Reduce costs by using less expensive materials or eliminating unnecessary items altogether.
Best Returns in Kitchen and Bathrooms
If you want to receive the most value for the dollars you decide to invest in the project, understand that kitchen and bathroom will give you the most return. In fact, USA Today announced last summer that bathrooms surpass kitchens as the top remodeling priority for homeowners. Renovating these rooms provides the most impact when it comes to increasing your resale value and home equity.
Home buyers still have a greater preference for modern kitchens with the cook top stoves and nice cabinets. They also appreciate cosmetic improvements in the kitchen, such as marble or granite countertops, ceramic tile backsplashes and under-cabinet lighting. Instead of large spas and Jacuzzi in the bathroom, buyers now gravitate toward larger showers and multiple shower heads.
Make Liberal Use of Paint
According to the book House Selling for Dummies, “Painting your house's exterior before you put it on the market give the biggest bang for your fix-up buck—if you use colors that conform with your neighborhood's decorating norm.”
Avoid dark shades and choose from among the extensive array of neutral colors. Creams, white's and other neutrals appeal to the greatest number of homebuyers, say the authors.
It is important that surfaces are properly prepared. Clean the surface and make any necessary repairs before applying paint. Pay particular attention to railings, trim and window frames, which can enliven the home's exterior
A recent paint job and the quality of paint are major selling point to prospective buyers.
Avoid installing wall-to-wall carpet throughout the home because it makes most buyers. Question what you are trying to hide underneath. Use laminated flooring to a minimum because it raises the same suspicions.
If you have hardwood floors, sand them down, repair as necessary and refinish them. It is not uncommon for home buyers to pull back the edge of carpeting to inspect the underlying floor.
Make sure you complete all renovation work before you put your home on the market and open it to real estate agents and potential buyers. It’s important to have your home looking its best so that you can command the best price. Even if you decide to do a mortgage refinance, remodel and stay, these tips can help you succeed with your objectives.