Written By
Amy Hoak,
MarketWatch
CHICAGO (MarketWatch) -- The in-ground swimming pool is a
huge asset to the social lives of Greg Gabbard's college-aged
children -- it's so popular with them and their friends, their
father wants to charge admission.
To
Gabbard, however, the pool is one of the biggest home-investment
mistakes he has ever made. It's expensive to run the filter and
cleaning usually falls on his shoulders. Even worse, it may be
working against him in efforts to sell the house.
"Assuming I
can sell this place, I will never have another pool," the
43-year-old said. Gabbard is convinced that the pool --
along with the high-maintenance cedar siding on the house's
exterior -- is the reason his four-bedroom home in rural North
Carolina didn't sell during a five-month stint on the market
last summer. Nearby Charlotte enjoyed a healthy real estate
market during the time, while Gabbard got a dozen lookers and no
takers.
His
assumption is probably correct, said Holly Slaughter, brand
manager and consumer experience expert for RealEstate.com, a Web
site that provides information to home buyers and sellers. A
pool often is a deterrent for buyers, especially in areas where
there are a number of community swimming holes, she said.
People often don't want the hassle or the energy bill that
comes along with the feature. Moreover, most lenders don't
include pools in their mortgage appraisals so the investment
doesn't get much bang for its buck.
Homeowners
can find plenty of information on which improvements will help
boosts the value of their houses. But significantly less
attention is paid to what to avoid when remodeling your home,
Slaughter said. "Knowing the positive as well as the negative
will make you a more educated home seller and will give you an
advantage and a leg up over other home sellers in your
neighborhood," she said.
Consider the
following seven deadly home-improvement sins before committing
to projects that may work against you to lessen your resale
value. These improvements are likely to cost you when it comes
time to sell.
1. Over
Expanding
Keeping up with the
Joneses is fine, but don't keep outdoing the homes on the block
with a procession of additions
-- unless you plan on staying put for a long while. A home that
becomes conspicuously larger -- and more expensive -- than those
around it risks becoming difficult to sell, Slaughter said.
Also keep in mind that additions tend not to return their
entire investment, according to Tom Stevens, president of the
National Association of Realtors.
The 2005 "Cost vs. Value Report" by the association and
Remodeling magazine found that homeowners were able to recoup
83% of the cost of a family-room addition and 82% of the cost of
a midrange master suite addition. An upscale master suite
addition paid off even less: On average, it recouped 80% of its
cost at resale.
2.
Making Your Home into Something It's Not
Don't change the
general architecture or style of the home,
and make sure that renovations match. For example, a modern
steel door doesn't belong on a ranch house built in the 1970s,
Slaughter said. Changes that are obviously inconsistent with
the style of the home limit the number of people who will be
interested in buying it, said Michael Nagel, vice chairman of
the National Association of Home Builders' Remodelor’s Council.
This is especially true for structures such as the Frank Lloyd
Wright house he's working on; it's relevant to a somewhat lesser
degree for a typical tract home.
3.
Changing a Room's Functionality
Completely altering
the purpose of a room is risky. So keep kitchens as kitchens and
bathrooms as bathrooms
-- they were built that way for
a reason.
"We all
expect basic functionality," Slaughter said. "If you start
changing the basic items that you expect out of your home,
you're really customizing it for yourself. It's not appealing to
a wide amount of the masses."
Even with
the rising number of people who work at home, building up an
office also can be a negative, Stevens said. The National
Association of Realtors/Remodeling magazine study found that
installing a computer workstation, office storage and commercial
carpeting -- as well as rewiring the room for computer and fax
use -- only produced an average 73% return on investment.
4. Doing
It Yourself -- When You Shouldn't
Be extremely confident
you're capable of taking on a project before attempting to do it
yourself. "I
wouldn't try and fix my own car, why would someone want to fix
their own house?" Nagel said. He frequently sees sloppy tile
jobs, for instance, completed by amateurs who should have
contracted an expert instead.
If you opt
to hire a professional, get referrals from friends or family
members before going to the classified section of the newspaper,
Stevens said. The National Association of Home Builders' Web
site advises checking professional candidates with local or
state offices of consumer protection and the local Better
Business Bureau. Ask if the contractor has received complaints
and verify the company has appropriate licenses and
registrations.
5. Under
Budgeting
Don't underestimate
how much projects will cost. Homeowners routinely make that
mistake and end up 20% to 30% off in their budgets,
Slaughter said. "People not only under budget from a monetary
point, but they also under budget time," she said. A prospective
buyer walking through a home isn't going to see the glass half
full when a project is only half complete. Be conservative when
budgeting, Nagel said. Expenses usually are added to jobs and
rarely subtracted.
6.
Making Unnecessary Renovations
When remodeling for
resale, don't waste time with renovations that won't pay off.
If you must have a pool, it helps to install a new patio, porch
and alternative entry way, Slaughter said, but you still may
have to lower your expectations on who will be interested in
buying.
Proceed
first with projects that are going to have the highest rate of
return, experts advise. In the last four annual editions, the
National Association of Realtors/Remodeling magazine study has
identified four projects that show the greatest return at
resale: improvements to siding, windows, kitchens and bathrooms.
In the 2005 study, a
midrange bathroom renovation paid off with an average 102%
return on investment and an upscale bathroom renovation recouped
93% of its cost. A midrange kitchen renovation recouped 91% of
its cost on average, and an upscale kitchen recouped 85%. A
minor kitchen remodeling job returned 99% of its cost.
7.
Neglecting Regular Maintenance
Don't forget proper
maintenance and annual upkeep -- those may be the most important
improvements of all.
Make sure the home is painted as needed, clean the gutters to
protect from water damage to the exterior, trim shrubs and check
for termites. Keep track of annual checkups and use that as a
selling point, Slaughter said. "The little bit of money people
spend to do annual maintenance saves them a lot of money in the
end," Stevens said.
Summary
Return on Investment (ROI) For Remodeling Projects
|
|
Expenditure Range |
|
Remodeling Item |
Low End |
Midrange |
Upscale |
|
Family Room Addition |
N/A |
83% ROI |
N/A |
|
Master Bedroom Addition |
N/A |
82% ROI |
80% ROI |
|
Bathroom Renovation |
N/A |
102% ROI |
93% ROI |
|
Kitchen Renovation |
99% ROI |
91% ROI |
85% ROI |
