CHAPTER 6 Upgrading with ROI in Mind OI in Mind
Making upgrades can be as easy as replacing the handle on your front door or as daunting as remodeling a kitchen or bathroom or even repainting the entire house. The question is always what home improvements give the best return on the remodeling dollar? Return on Investment (ROI) is generally less than 100% in real estate, so the rule of thumb is “less is more.” It is frequently advised that it’s better to update/remodel your home while living in it and not solely at the time it comes to sell. That way, there is more enjoyment in the improvement and less cost in preparing for sale. Some desirable upgrades or home improvements will not return their cost in the sale price. If your home is worth $575,000 and you spend $50,000 to revamp the kitchen, don’t make the mistake of assuming that the investment will increase the value, dollar for dollar. The remodel may add value to the home, but the return on dollars spent will be around 50%. Smaller upgrades, like replacing outdated fixtures in the kitchen and bath, are certainly worthwhile, but the major remodeling of those rooms isn’t wise, just to sell your home. That’s not to say you can ignore necessary repairs that a home inspector would red-flag or a bank would demand before issuing a loan to a buyer. If obvious problems, like old shingles or old original furnace exist, you may want to replace those before putting your home on the market or expect to give certain concessions to the buyer. When it comes to repairs the buyers don't want to deal with it any more than the sellers do, but the buyers have options they can just go buy a different home. 33
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