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I get steamed every time I hear someone say that remodeling pays for itself.
In a booming market it might look like the remodeling is paying for itself, but in fact you’re just getting the benefit of the general rise in prices. You could spill a gallon of milk on the kitchen floor and it would look like the spill was paying for itself, if you get my drift.
The truth is that remodeling is expensive as well as disruptive. It can be like a bomb going off. (Which is why I selected this NASA illustration of a giant asteroid hitting the Earth. It’s what NASA calls “coastline remodeling.”)
Does remodeling pay for itself? Instead of asking your local builder, who will say yes, yes, yes, check with an appraiser.
Here's an excerpt from a press release I got today from the Appraisal Institute.
"A common misconception among homeowners when it comes to home remodeling and renovation is that cost equals value," explains Richard Powers, MAI, SRA, president of the Appraisal Institute. "However, not every renovation or remodeling effort will pay off at closing." For consumers looking to invest in or sell their house, Powers offers the following advice: - Invest in basic upgrades, such as fresh paint (use neutral colors) and new fixtures - Avoid over-improvement by sticking to what's standard in your neighborhood - Consider adding a bathroom, which is an appealing feature for home buyers - Projects that add square footage to bring a house up to - but not beyond - community norms generally pay off the most
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.