VOL. 127 | NO. 30 | Tuesday, February 14, 2012
Guest Column
By Eric A. Trotz
As 2012 gets into full swing, consumers may be thinking about undertaking a home improvement project, but not every renovation effort will pay off when the owner sells his home.
Consumers should be aware that cost does not necessarily equal value. Here are some other tips for homeowners:
What home improvement projects yield the best return on investment?
Typically the basic upgrades ? from painting the walls neutral colors to installing new fixtures ? offer the largest returns. After those, homeowners can add value by undertaking renovation projects that bring their homes up to ? but not beyond ? community norms. Projects known to offer a good return on investment include updating kitchens or bathrooms, adding a bedroom and improving a home?s curb appeal.
What home improvement projects yield the worst return on investment?
Projects that take a home significantly beyond community norms are often not worth the price they cost in a resale situation. They certainly may benefit a homeowner?s quality of life, but if they don?t match the neighborhood standard, they?ll be considered excessive and may offer a very low return on investment.
How long until a home improvement project pays for itself?
Sometimes immediately, but with the housing market still struggling, it may be best to consult a professional and competent appraiser to help you determine this answer. However, generally the longer a homeowner stays in a property, the greater the opportunity for a return on most investments.
Are green renovations worth it?
It all depends on the improvements made. Adding Energy Star appliances and extra insulation are likely to pay the homeowner back in lowered utility bills relatively quickly. Lower utility costs also are a draw for potential homebuyers. Other green improvements, such as Energy Star-qualified windows, may be pricier, but can reduce a homeowner?s energy bills by anywhere from 7 to 24 percent compared to non-qualified windows, according to the federal government?s Energy Star program.
How can appraisers help homeowners?
The appraiser is an impartial party to any real estate transaction and has no vested interest in the sale of a property. For an objective, unbiased analysis of what a homeowner?s home would be worth both before and after an improvement project, he can work with a professional real estate appraiser to conduct a feasibility study. During a feasibility study, the appraiser will analyze the homeowner?s property, weigh the cost of rehabilitation and provide an estimate of the property?s value before and after the improvement.
Where can a homeowner learn more about home improvements?
The Appraisal Institute offers a free, informative brochure titled ?Rehabbing & Remodeling,? which provides consumers with advice on what to do before undertaking a home improvement project. It can be found online at www.appraisalinstitute.org/findappraiser/brochures/Rmdlng_n_Rhab.aspx.
How can a homeowner locate a professional appraiser in his area?
For additional information on the Appraisal Institute and to view a list of local chapter members, please visit www.appraisalinstitute.org/findappraiser or www.aimemphis.org.
Eric A. Trotz, MAI, is president of the Memphis Chapter of the Appraisal Institute.
Source: http://www.memphisdailynews.com/news/2012/feb/14/what-home-improvements-pay-off/
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