It’s a tale of two families. The Smart family were empty-nesters. They bought a smaller house in a more modest neighborhood and to make it just the way they wanted it, they gutted most of it and rebuilt.
When their pal, Art Rooze, an editor at Family Handyman magazine came through for a look, he knew they had outclassed the neighborhood.
“If they lived there 10 years before selling, they still wouldn’t get their whole investment back,” Rooze says. “But they figured they’d be there forever. They liked what they’d done and didn’t care about resale. They knew what they were doing.”
Not so for Rooze’s other friends, the Dumb family. “They gutted, too, put in a first-rate kitchen, all the best fixtures in the bath, a wonderful remodeling job. But there was a good possibility in a few years they’d want to move,” he says. “They won’t get their money back, either, only they’ll be disappointed. They didn’t know what they were doing.”
Rooze’s stories point to two crucial questions: When planning a home remodeling project, what are the guidelines for maximizing the amount you can recoup when you sell, and how do you make sure you don’t go too far?
“Everyone thinks they know what helps resale and what doesn’t,” Rooze says, “but overarching the whole question is the value of your home in relation to the neighborhood.” If you need to charge 10 percent more than the average price of a home in your neighborhood to recoup those renovating costs, you are on thin ice, he says.
If you don’t know the value of your home in relation to the neighborhood and you are planning a big job, you might want to get it appraised, Rooze says.
“If you are thinking of selling within three years, I would recommend getting a Realtor to give you a professional opinion as to what your house is worth now and what it will be worth after the work is done,” says John Kmiecik, president of the Chicago Association of Realtors. He owns Century 21 Kmiecik Realtors, which has two Southwest Side offices.
A real estate agent will give you an opinion at no charge but will seek your business when you decide to sell. On the other hand, a professional appraiser will charge about $100 for a one-time service.
Camilia Benson, president of Wildwood Realty on the Northwest Side, also recommends visiting open houses in your area “to get a sense of the level of the finish inside homes. Are you planning work that will be at, below or above the level that buyers are looking at in your area?” she says. “If there is new construction nearby, visit some of those sites. See what people are looking for.”
“Stay away from pools,” Benson adds. Chicago ordinances prohibit in-ground pools, and above-ground pools appeal mostly to people with children. “A pool doesn’t showcase your place because it takes up the whole back yard.”
Large whirlpool baths, hot tubs and Jacuzzis might seem like great attractions, but ultimately people don’t use them that much, Benson says, and buyers know that. “People are too busy working to spend a lot of time soaking in a tub. Steam showers are a better investment these days.”
“I’ve seen the above-ground pools, too,” Kmiecik says with a chuckle. “And the elaborate fireplaces; plush, special carpets; and beautiful, customized paint job” such as murals or sponge painting. What they all have in common is that the people who did them love them very much, he says.
“It’s their taste and their efforts are admirable. But in the long run, it’s personal, and it won’t get your investment back. Buyers are smart. They know you’ve put a lot into it,” he says, and while they might appreciate how special it is, “they won’t want to pay for it.”
If you are interested in resale, stick with a more moderate approach, Kmiecik says. “The simpler the design and the execution, the better it will sell.”
By the same token, you have to find the line between simple and cheap, Rooze says. “Cheapness hits the buyer right in the eye. It’s a turnoff.” If the flooring, an appliance or anything the potential buyer discovers is cheap, he’ll immediately wonder about everything in your house hidden from view, Rooze says.
Another way to waste money in the guise of saving is to play do-it-yourself with design. “Someone wanted an eating area in their kitchen,” Benson says, “so they moved the sink to a side wall underneath a teeny window. It was horrible. Kitchens aren’t easy, and you need good planning. It’s worth the extra money to get a professional design.” If you don’t want to hire an architect or designer, you can get help from a kitchen center where you buy cabinetry, counters and flooring, she advises.
In many cases, neighborhood fashion plays a role. If you put in a new roof, furnace or plumbing, don’t expect full resale value six months later, Rooze says. “New copper pipe is probably not on everyone’s wish list.”
But not so fast, Kmiecik says. In his “Bungalow Belt,” value is the watchword these days and that new roof has more sex appeal than you might think. “When a buyer who works hard for his money sees a new roof, that’s three or four thousand dollars he knows he’s not going to have to lay out in the next several years,” Kmiecik says.
Here are more renovation tips:
– Decks. Decks are hot, patios are not, Benson says. Even at $5,000 to $10,000 on a $150,000 house, you should get a return on your investment. Kmiecik agrees: “In the city, it evokes a suburban lifestyle.”
– Kitchens. You’ll get 80 to 90 percent of your money back, Kmiecik says. Benson says maybe 100 percent. “It’s the best thing you can do,” she says. Renovations run at least $20,000 and can go as high as $100,000. “But $40,000 to $50,000 is the high end (in a home under $300,000) if you’re looking for resale. Many buyers will pay more for a new kitchen knowing that because it’s included in the cost of the home, it’s deductible.”
– Fireplace. It depends on where you live and how much you hope to get for your house. “If you are looking for $230,000 or more, then your home can carry most of the added value of a fireplace and buyers in your bracket will expect one,” Benson says, even if you opt for a masonry addition, which could run $10,000. “Old Chicago homes under $200,000 won’t have them and buyers won’t miss them,” Kmiecik says.
– Aluminum siding. A good bet, especially when it covers eaves and soffits, Kmiecik says. It will help the salability of your home but don’t expect 100 percent back. It’s smarter to add siding a year or so before your house goes on the market. “If it’s new, people wonder what you’re hiding,” he says.
“In the end, moderation is the best thing to strive for,” Rooze says. “Go for simplicity in design and quality in execution.”
