Why smaller remodeling projects can have a bigger impact

The Appraisal Institute, the nation’s largest professional association of real estate appraisers,advised homeowners across America in March to opt for minor upgrades instead of major home renovations. According to them, this is the best way to realize better return on investment in this economy.

Following Remodeling magazine’s most recent 2015 Cost vs. Value report, remodeling projects that can positively impact 2015 appraisals include roofing and vinyl siding improvements, garage door and fiberglass entry door replacement, manufactured stone veneer, mid-range window replacements and 20-gauge-steel entry door replacement. Minor kitchen remodels like replacing cabinet fronts and countertops were also endorsed. All these saw a definite cost-to-value ratio rise in 2014.

remodel kitchenWhat this essentially means is that less expensive projects have the best value. If one wants to recoup the cost of the upgrade when the home is sold, then it is best not to exceed a budget and neighborhood standards. Choosing specific remodeling projects that will help preserve the value of homes and recoup renovation cost is a wiser course to take. More specifically, one should focus on maintenance and repair projects that will uphold this value rather than cosmetic trims.

This is not a new stance for experts to take. At the start of 2015, the National Association of Realtors urged homeowners to be more cautious about ambitious remodeling plans. Instead they advised small and exterior-focused improvements to realize better value for homes in 2015.

Why are these groups advising against major renovations? We only need to look at the economy today. Even though on the mend, it is not bouncing back as quickly as experts had hoped. Contrary to what popular TV shows tell us, realizing one’s home equity in a heartbeat doesn’t really happen.

Buyers in general are also more cautious than before and are scrutinizing each home feature to establish their money’s worth. They are not going to be fooled by a state-of-the-art kitchen in a house that has a leaking roof or cracked baseboards. So focusing on essentials is more important, and spending less means less risk of loss, as per the survey.

In the New York metropolitan area, for example, a minor kitchen renovation project realized 84.2 percent of the cost, but an upscale remodeling could recover only 69.1 percent. The risk is high because the buyers may not be willing to pay for these renovations if they do not contribute to the overall value or match their taste.

After closely studying the buyer mentality, experts now agree that visible items need to be upgraded first. So anything that improves the home’s curb appeal scores pretty high. A fresh coat of paint, refinishing hardwood floors and countertops can provide a great first impression and increase the value tremendously. Remodeling projects that do not show much promise in terms of ROI are composite deck additions, master suite or two-story additions and major kitchen remodels, as mentioned above.

The process can be complicated for many, and the best way to go about it is to confer with expert real estate appraisers. They will conduct a feasibility study to assess the state and value of the home before and after the remodeling phase. Based on their assumptions, they can help create a home improvement budget that is feasible and harbors less risk for the homeowner.

Source: Mutlibriefs.com