The Appraisal Institute invited 2013 President Richard L. Borges, MAI, SRA, to discuss which home improvements yield the best return on investment in the organization’s latest YouTube video.
According to Remodeling magazine’s most recent Cost vs. Value report, the projects with the highest expected return on investment are siding replacement, entry door replacement, attic bedroom addition, minor kitchen remodel and garage door replacement.
Borges emphasizes that projects that take a home significantly beyond community norms are often not worth the price they cost in a resale situation. If they don’t match what’s standard in a community, they’ll be considered excessive.
Borges advises homeowners that it may be best to hold off on big renovations if a homeowner isn’t sure how long they will be in their home. The longer a homeowner stays in a property, the greater the opportunity for a return on investment. Consumers should be aware that cost does not necessarily equal value.
For an unbiased analysis of what their home would be worth both before and after an improvement project, a homeowner can work with a professional real estate appraiser – such as a Designated member of the Appraisal Institute – to conduct a feasibility study.
During a feasibility study, the appraiser will analyze the homeowner’s property, weigh the cost of rehabilitation and provide an estimate of the property’s value before and after the improvement.
Some green renovations, such as adding Energy Star appliances and extra insulation, are likely to pay the homeowner back in lowered utility bills relatively quickly. Lower utility costs also are a draw for potential homebuyers. When appraising a home, the appraiser evaluates local supply and demand for green and energy-efficient properties and features.
The Appraisal Institute offers a free, informative brochure titled “Rehabbing & Remodeling,” which provides consumers with valuable advice on home remodeling.
What home improvements do you think yield the best return on investment? Share your “opinions of value” with us!