Last year I wrote an article on “Cost-Value Ratio” or more appropriately what improvements are the best return-on-investment for homeowners or sellers – see link right here – http://shellyrobersonrealtor.com/home-improvements-critical-now-more-than-ever/. Home improvements are critical for sellers and buyers alike, but are sellers getting the right advice? Consistently I see mistakes by sellers, usually at the advice of their realtors. Here is some factual evidence that sellers can use, despite their realtor’s advice, which have real data to back up the recommendation.
One of the first things a person (or potential buyer) sees on a home is the front entry door. Because of this the front door is one of the improvements a seller can make to their home which will have a big impact on value to a buyer. A 20-gauge steel front entry door – appropriately designed and colored – is once again the number one improvement on the “Cost-Value Ratio.” For an average cost of just over $1,200 a new steel front entry door generally returns at least 100% of a seller’s investment.
A properly improved front entry door lightens up the mood and feel of the house – and can make an older house seem updated. The buyer thinks “Wow” before they even get in the house and this was a $1,200 investment.
Realtors Consistently Get Cost vs. Value Wrong – Or Don’t Know Any Better
I am no longer surprised when I see homeowners getting their homes ready to sell and they make improvements to areas of the home which gets no real return-on-investment – all at the advice of their realtor. If the realtors had just looked at this Cost vs. Value list and used common sense they would be making better suggestions for their clients.
I am also no longer surprised when I see realtors counseling their clients not to do repairs or improvements because “the market is hot, let’s just get it on.” In 2014 I saw it again and again. Factual evidence proves that properly thought-out improvements will typically give homeowners nice cash-on-cash returns when they list and sell their homes – especially in certain areas of the country like the San Francisco Bay Area.
Simple exterior projects are consistently the top improvements sellers can make which will make the greatest impact on home values for the investment of time and money. In 2015 there are five categories of improvements which rose from 2014:
1) mid-range roof replacement (+5.9%); 2) mid-range garage door replacements (+5.6%); 3) 20-gauge steel front entry door replacements (+5.4%); 4) vinyl siding replacement (+3.2%); and 5) fiberglass front entry door replacement (+1.7%)
The remainder of the list with national average returns on a percentage basis can be found at “The 2015 Remodeling Cost vs. Value Report” at this link – http://www.remodeling.hw.net/benchmarks/cost-vs-value/the-2015-cost-vs-value-report_o.
Projects That Improve Curb Appeal Are Still Important
If you are considering improvements to your home please take into consideration the data from this report which shows the highest return on investment (ROI) for individual projects. When preparing a home for sale there are still many little things that improve curb appeal which are also important to improve attractiveness, attention, and value.
City Ranking in Cost vs. Value Ratio
As we all know real estate markets are localized. If your long-term plans include staying in your particular neighborhood that should be the primary factor in your decision to perform a major remodeling project. The value of each of your remodeling projects at the time of sale is an open question. Importantly, location, design, workmanship, and particular buyer taste for your specific installations all become factors.
San Francisco, CA was number one at 100.3%, Honolulu, HI ranked number two for cost-ratio values at 94.6%, San Jose, CA was 3rd at 87.1%, Riverside, CA was 4th at 84.1%, Sarasota, FL was 5th at 80.7%, Austin, TX was 6th at 78.6% and New Orleans, LA was 7th at 77.6%.
Everyone knows a Realtor, but not all Realtors are created equally. The best Realtors will offer services, at no charge, including making recommendations and suggestions, referring quality vendors, contractors, designers, and even taking on the management of day-to-day tasks for your remodeling projects. No matter what project you are considering you should consult with an experienced and competent realtor to get some market input and another set of experienced eyes looking at your home (through the eyes of a prospective buyer). Remember remodeling projects typically go over budget and if you are looking for a high cost-value ratio and high cash-on-cash returns a local experienced realtor can give you a good idea of the current market trends in your neighborhood. Remember – don’t do this project alone – get help.
Alain Pinel Realtors
24+ Years’ Experience, 625+ Closed Transactions