Whether, and How, to Remodel

Posted by: Peter Coy on April 6, 2006

I get steamed every time I hear someone say that remodeling pays for itself.
remodeling.jpg
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

Reader Comments

David Porter

April 7, 2006 3:28 PM

Peter,

I just did a whole series on this very subject. I thought your readers might like to peek. Here are the topics.

1.) Which home improvements will add value to your home?
2.) Should you remodel or move?
3.) The best way to finance a home improvement.
4.) The worst way to finance a home improvement.

Here is a link: http://blog.pacesettermortgage.com/2006/02/home_improvemen.html

Keep up the good work on the blog. I am a loyal reader!

David Porter
President/CEO
Pacesetter Mortgage

purebushit

April 11, 2006 2:12 PM

Peter: remodeling -hmmmmm, it IS a toughie! Believe me....3 remodels in 4 years - master bath in condo + adding a master Suite with new bath and updating old master bath....oh its a LOT of heart ache! The MESS!!! The stuff that gets delivered wrongly! The caliber of workmanship - more $$$ does NOT equate to best workmanship! Low-ball bids ALWAYS lead to work-stopage/randsome = eventually MUCH more money and time!!!

If they are selling; let the new buyers suffer for what they WANT/not what you THINK works best! I'd rather buy a fixer-upper and have it 'OUR way!' but sometimes, a brand-spanking NEW place is a blessing. Good luck to all! robert h

John Deeds

May 30, 2006 7:53 AM

Given the energy price hike having a political election year lull, the oil situation trend points to consumption doubling every ten or less years. So an Energy Saving remodeling may be in your near future.

RentNet.Org lists energy remodelers.

Bathroom Suites

October 23, 2006 6:14 AM

When looking to sell your house the two most important rooms in your home are the bathroom and kitchen. Both can be revitalised at a relatively low cost. Always try to stick to neutral colours, such as white bathroom tiles and a white bathroom suite. In the kitchen work tops and new doors can change the whole look and can cost a lot less that would imagine. If you are a handy at diy and take you time this could add £££ on to the value of your home.

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About

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.

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