5 Home Renovation Money Traps:
REMODELING PROJECTS TO STEER AWAY FROM
It’s quite common for homeowners who are motivated to put their homes on the market to instinctively want to do some home renovations. True, upgrading your property will likely yield a higher selling price, however, there are many common mistakes people make during the home renovation process that end up BACKFIRING on them and in turn costing them lots of $$$. The last thing you want is to invest time and money into renovations and NOT be able to recoup those expenses when you sell your home. Here is a list from a study done by the U.S. News Money Report of some far-too-common renovation mistakes homeowners make that will hopefully keep you from falling into the same money trap.
1. Home Office Remodel:
Homeowners who remodel a home office should brace themselves to the possibility that they will recoup on average LESS THAN HALF of the expense to make this update to their property. Studies show that although the number of people who work from home has increased over the years, not all buyers prefer a space in the home intended exclusively for work. If given an option homebuyers prefer an additional bedroom rather than an office space.
2. Sunroom Addition:
Much for the same reason as the home office remodel, a sunroom addition can likely only recoup 51% of the expense to build it. Many buyers seek out an extra bedroom and revere a feature like a sunroom as just a “bonus room” or “wasted space” rather than a necessity. When a 3 bedroom home with a sunroom is on the market, it cannot compete with the 4 bedroom inventory in the comparable areas. With that being said it loses the chance of being shown to potential homebuyers who are in the 4 bedroom market.
3. Bathroom Addition:
The bathroom is an expensive addition to the home purely due to the fact that you’re dealing with lots of plumbing, heating, air conditioning, electrical concerns and fixtures. An owner who invests approximately $39K to add a bathroom on average recoups only about 60% of that expense. The expense per square foot for an additional bathroom far exceeds that of the expense per square foot of adding another sought out home feature such as a walk-in closet.
4. Upscale Master Suite Addition:
Who wouldn’t want an upscale master bedroom that feels like a 5-star suite at the Ritz Carlton? Someone who doesn’t want to flush a huge chunk of cash down the toilet doesn’t! Studies show that homeowners who build an upscale master suite cough up an average of over $100K for the renovation and only recover about 52.7% of that expense. OUCH! This is due to the fact that although potential buyers appreciate the opulence of an upscale master bedroom, they can find a brand new master suite in the original floor plan of a brand new home where the cost is less and already factored into the entire selling price of the home.
5. Garage Addition:
A garage addition is a laborious project often requiring a slab to be poured, walls to be constructed and a roof to be built. The average cost to build a garage is approximately $58K and homeowners on average only recover about 62% of that expense. The versatility of a garage is limited and it doesn’t necessarily justify it’s high cost of construction. The only thing that keeps it from being actual “living space” is insulated walls and air conditioning which is a high cost for just sheltering vehicles.
It is a wise decision for ambitious homeowners who want to sell their homes to plunge into their reserves and make some home improvements prior to putting their properties on the market. However, the key is to know which renovations will ultimately be beneficial and which ones will bite you in the financial foot. By steering away from these 5 remodeling projects you will likely avoid driving yourself straight into a money trap you can’t get out of.
reference: U.S News Money Report