If you’re like most homeowners, improving your home to keep the value current is very important to you. The problem is balancing projects that you want – those that improve your life and lifestyle – with what is practical in the event that you resell the house.
The days are long gone when you realistically could expect to be in the same house for a lifetime. According to a report by the National Association of Home Builders, the average homebuyer will stay in a particular house for an average of 13 years. Approximately one-third of all buyers move out within six years.
What does this mean to you?
When you buy a home, you obviously want that home to be as comfortable and accommodating to your lifestyle as possible. You also want it to reflect your personal taste and, to a lesser degree, demonstrate your status.
So, you opt for those improvements, renovations, and remodeling projects that fit you and your family.
But, since the reality is that you will probably not be in that same house for the rest of your life, you have to compromise. You have to improve the home for yourself short-to-medium-term, with an eye on the salability for the future.
In other words, every time you consider project, you have to think about how desirable that project might be to future potential buyers and how much of your home improvement investment will be recouped in resale value.
The 2015 Remodeling Cost vs. Value Report is created by Remodeling Magazine, in cooperation with REALTOR Magazine and the National Association of Realtors. In the report, 36 mid-range to upscale home improvement projects/renovations were ranked in over 100 US cities across the country.
The purpose of the report is to give the average cost for a correctly-installed professional job in each of the categories, along with a brief description of what each job should include. The report is also broken down by city and region.
The “value” section is shown as the percentage of the project’s initial investment that might potentially be recouped if the house were ever sold.
This is an invaluable resource that you can use to see what are the current trends in home improvements/remodeling projects, and more importantly, how much value a particular project actually adds to your home.
Two important takeaways from this report are that (1) most remodeling/addition projects (as opposed to improvements involving replacements) aren’t going to return the money invested, and (2) most larger projects carry with them the inherent risk of the largest losses.
The reason for this is larger projects can result in “over-remodeling”, where the money invested in the project is more than home values in the neighborhood can support.
It is a generally-accepted tenet of real estate that any home improvement that adds on less than 60% of the initial investment as resale value is an iffy proposition, at best. Such a low percentage means that it is quite likely that you stand to actually lose money on a professionally-done improvement.
With that in mind, let’s take a look at eight home improvements that really aren’t worth the money.
8. Backup Power Generator: (59.9 %)
Average Cost: $12,135
Average Added Value: $7263 (loss of $4872)
Project Description: install an electrical backup system with a capacity of 70 amps of emergency power, with two 240 – volt circuits and six 120 – volt circuits. The installation includes the mounting of the generator on a concrete floor composite pad.
The generator will include a grounding rod, an exterior disconnect, a load center, and an automatic transfer switch.
The installation includes 30 feet of electrical cable and conduit for connections, grounding cable for the circuits, and flexible fuel line for connecting to an existing propane gas supply.
Why not a backup power generator? Prospective buyers will not view a backup power generator as “sexy”. When homeowners spend “extra money” on home improvements, they typically spend it on improvements that they will enjoy, instead of what is practical. Although a generator is indispensable when it is actually needed, people are hesitant to spend the money when they don’t need it.