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| Getting the value out of your home improvement |
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Spring is here once again and many homeowners are discussing which home improvements need to be tackled in order to maintain the value of their property. Others are thinking about remodeling projects in an effort to help sell their homes more quickly so they can move. Whatever your reason, make sure you are confident about the project being done, the materials going into or on your home and above all, the people doing the job.
While many remodeling projects are done to simply satisfy a need or desire, we will be discussing some issues we face when trying to plan a project in hopes of a financial return and an increase in resale value.
According to Robert Sheehan, President of Regis J. Sheehan and Associates, you should first evaluate your current homes value and then get a cost estimate for the improvement. Once you have these figures, compare the sum to similar home values in your neighborhood. What you want to avoid is making an improvement that puts you in a class all by yourself.
Dan Fritschen, author of Remodel or Move, explains that neighborhoods will only support so much expense for a particular house. Home buyers want to purchase homes in neighborhoods where the other homes are of equal or greater value than the investment they are making. If your improvement cost would cause your selling price to skyrocket past your neighbors, then you might want to scale back on the improvements. That being said, Fritschen states,” Almost without exception, if you have a viable neighborhood and if you are bringing your home up to or slightly above neighborhood standards, from the financial side you almost can’t go wrong by renovating.” Sonya Stinson of Bankrate.com also points out in a recent article saying, “It is the modest upgrades and not the grand additions that offer the best return on your investment in today’s tough market.”
Every year Remodeling Magazine prints a cost vs. value report on various projects. The compared costs of these projects are compared to the estimates of their resale value by members of the National Association of Realtors. So what are the top projects that add the most value for the money these days? According to Remodeling magazine’s 2008-09 Cost vs. Value report they were:
Replacement Siding - #1 when upgraded to Fiber Cement over other types of siding. The return percentage was 86.7%. Vinyl Siding was #2 on the list with a return rate of 80.7% for mid-range projects. Foam backed sidings made the top 5 with an 80.4% return on investment.
Replacement Windows – Both wood and vinyl windows came in with a return rate average of 80%. This ranked them respectfully third and fourth in value added projects. Not to mention the energy savings that begin immediately. According to Energy Star, replacing single pane windows with Energy Star rated models will save the typical homeowner in Michigan between $240 and $280 in utilities per year. In fact, single pane windows can lose up to 50% of your heating and cooling energy through leaks.
Deck Additions – Overall, wood decks came in at an 81.8% return on investment while composite decking came in at 73.7%.
Probably the biggest decision of all is choosing who will do the work. If you’re like most people, this decision will be based on many factors. The first usually being price. Just remember that cost vs. value isn’t about the lowest number. Top of the line products but shoddy installation won’t yield much of a return.
That doesn’t mean you should go with the highest number or have no control over the bidding process. In Stinson’s article, she quotes Kermit Baker, director of the Remodeling Futures Program. He states, “Contractors are much hungrier for the business now, much more responsive and more willing to negotiate on scheduling and things like that. I’m guessing there will be some negotiating on pricing too, but their labor costs have probably not gone down and their material costs have by and large gone up.”
Keep that in mind when someone gives you a low ball price. Most contractors are willing to negotiate on product upgrades and specialty items. However; according to most manufacturers and industry leaders, the contractors that negotiate solely on price, tend to make it back up in lack of workmanship and cutting corners.
“The quickest way to get nailed on your home improvement projects is not doing your homework on your contractor,” says Jay Macdonald of Bankrate.com. In his article he states the three main reasons homeowners have filed over 6400 consumer complaints with the Better Business Bureau:
1. Homeowners don’t get all the details written into the contract before signing it.
2. Homeowners select a contractor based on price alone, without investigating their background.
3. Homeowners get duped by outright scams.
So how do you know if you are getting a reputable and qualified contractor for your project? Investigate, investigate and investigate. Does the company have a verifiable license? Does the company carry the right types of insurance to protect you from loss? Does the company hold certifications or is part of a professional affiliation? Look for references and check with their banking and suppliers regarding financial security.
At Village Siding and Windows, we will help you plan your project, find the solutions that fit your needs and provide you with quality products and service. All backed by a written guarantee. We invite you to go back to the homepage of our website and take a look around.
Click on the links below for more information:
 8 Steps in choosing the right contractor
How to plan before the estimate
Request a Free Consultation
Bibliography
©2008 Hanley Wood LLC. Reproduced by permission. Remodeling Cost vs. Value Report 2008-09. Retrieved 2009, from Remodeling Magazine Web site: www.costvsvalue.com.
Cost and energy savings estimate for energy star qualified windows. (2005). Retrieved April 10, 2008, from Energy Star: www.energystar.gov/windows
Giusti, M. (2007). Which makes more sense, move or remodel? Retrieved March 27, 2008, from www.bankrate.com.
Macdonald, J. (2007, April). Don't let bad contractors nail your budget. Retrieved March 27, 2008, from Bankrate Web Site: www.bankrate.com
Stinson, S. (2008). 6 home renovations with major payoffs. Retrieved March 27, 2008, from Bankrate web site: www.bankrate.com
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