Some homeowners choose to invest in their existing home rather than looking to move elsewhere. These are some of the things owners should be aware of before taking on a big do-it-yourself project.
An expert from HomeTeam Inspection Service in Ann Arbor shares some tips for homeowners who plan to take on a remodeling project.
Median selling price of homes reached a record high in June of 2022, coming out at over $415,000 — an increase of over 10% in the last year. This statistic, hand-in-hand with rising interest rates, is leading some homeowners to consider improvements to their existing homes.
The National Association of REALTORS® recently published a study outlining the top interior and exterior projects that provide homeowners the largest return on investment when it comes time to sell. However, before getting started, it’s important that homeowners are fully aware of what other impacts may accompany these projects.
Why do some projects yield a higher ROI?
The cost of a remodeling project does not always translate directly to the value-add that project provides.
Different people react differently to the various types of remodeling projects. Some remodels simply bring visual enhancements like new flooring or cabinets, and others bring both visual enhancements and a long-term economic advantage.
The assumed value of hardwood flooring replacing tile flooring is subjective as different buyers’ tastes, preferences and lifestyle needs will influence their willingness to pay.
On the other hand, updated appliances are both visually pleasing and provide measurable financial benefits to buyers. For example, old refrigerators can use up to three times as much electricity as a newer, more energy-efficient model. Energy-efficient dryers use 20% less electricity, and energy-efficient washing machines decrease energy usage by 40–50% and water usage by 55%.
What you need to know before getting started
Remodeling projects can easily become more expensive than expected. In some cases, the process of a major remodel can uncover unknown issues that absolutely must be addressed, especially in older homes.
Before embarking on any home-improvement project, it is important that you are prepared to spend some additional time and money to ensure that everything is done properly and no existing issues are simply covered up.
Only one in five homeowners finish their renovation projects under budget. To avoid exceeding the budget unexpectedly, increase the original budget by between 10 and 25 percent to make up for any surprises.
Renovations can impact the value and functionality of a home
As stated in the National Association of Realtors® report, two of the primary ways remodeling projects affect a homeowner are in cost recovery and homeowner joy. It is important to realize that, while the value of the home may increase after a remodeling project, there is no guarantee that 100% of the costs will be recouped.
However, increases in functionality and overall owner satisfaction may make this investment worth it. For many owners, there is no price tag that can match the value of truly loving their home and what it can do for them.
The project is done, now what?
Protect your investment. As a HomeTeam Inspection Service owner, I have seen plenty of remodeling projects that have not been inspected and ultimately create problems years later.
Once a remodeling project is complete, be sure to have an independent home inspector evaluate the visual aspects of the space. This ensures that the remodel is complete and safe and protects the owners from any unexpected costs should they choose to sell the home later on.
This step is especially critical for “flipped” houses where the remodeling has been completed by an investor looking to resell the home for a profit.