June 6, 2014 3:23 pm
"It's very important that renovations stay within, but not exceed, community norms," said Appraisal Institute President Ken P. Wilson, MAI, SRA. "If they don't match what's standard in a community, owners could have difficulty recouping their investment when selling the property."
According to Remodeling magazine's most recent Cost vs. Value report, some of the projects with the highest expected return on investment are entry door replacement (steel), deck addition (wood), garage door replacement, attic bedroom and minor kitchen remodel. Other renovations with high expected pay-offs include window replacement (wood and vinyl), siding replacement (vinyl) and basement remodel.
Wilson advised homeowners that it may be best to hold off on major renovations if a homeowner isn't sure how long they will be in the home. The longer a homeowner stays in a property, the greater the opportunity for a return on investment, he said.
"Consumers should be aware that cost does not necessarily equal value," he added.
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 and energy-efficient 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.
Published with permission from RISMedia.