William Smith did it to give his four grandchildren a place to hold their birthday parties. Lynne Shapiro did it so that her growing family could eat comfortably at her dining room table.
Smith, a Lake Villa resident, didn’t worry too much about how many dollars he would add to his home’s resale value before he began a basement remodeling project that took three years of weekend work to complete. Working almost entirely by himself, Smith built a walkout basement that includes a recreation room, bar, workshop, craft room and bonus room. Smith even added some personal touches. He filled the basement’s bathroom with items from the Michigan beauty salon his now retired mother-in-law used to run. The rest of the basement houses old tools he collected from his family’s farm in Ohio.
Smith figures that the project will boost his home’s resale value by about $30,000 to $40,000 because a walkout basement is considered livable space.
But Smith’s point wasn’t to add to his take when it comes time to sell. He did the work because he enjoys tackling do-it-yourself projects. And then there were the grandchildren to think about.
“Right now we have some very usable living space in our home that we didn’t have before,” he said. “And it gives our four young grandchildren a place to hold their parties. I did this primarily to increase our enjoyment of the house.”
Shapiro, a resident of Deerfield, had the same thought when she and her husband decided to remove a doorway between her home’s kitchen and den, turning two small rooms into a single large one.
“The table we eat at used to back up against the wall before we did this renovation,” Shapiro said. “But we’re expecting another baby, and we wanted to be able to all eat at the same table. We didn’t think either way about whether or not the project would add to our house’s resale value. We did it because we wanted to.”
Shapiro and Smith illustrate a classic debate when it comes to home improvement projects. Some homeowners carefully consider the value a project will add to their homes before tackling any renovation or repair.
Others add a master bedroom suite, build a room addition above their garages or finish their basements because they want to increase the enjoyment they get out of their homes.
But no matter what group you fall into, it makes sense to do at least some research before starting a home improvement project, especially if you plan to sell your house soon. While adding an in-ground pool might provide you with some summer fun this year, your enjoyment of it might be less if when it’s time to sell you discover that this same amenity is turning buyers away.
Each year, Remodeling Magazine releases a study of the most cost-effective home improvement projects. The projects that rank at the top of the magazine’s Cost vs. Value report rarely change.
Minor kitchen remodeling
The 2001 report lists minor kitchen remodeling as the home improvement project that will bring the most return when it’s time to sell your house.
The project returns an average of 87 percent of its cost, the study says. In Chicago, this figure is even higher. The editors of Remodeling estimate that city home sellers will see a return of 108 percent of the money they spend on a minor kitchen remodeling project.
Bathroom remodeling projects also rank high, returning 81 percent of their cost nationally and 95 percent in Chicago.
The magazine also ranks major kitchen remodeling, the addition of a family room, new siding, the addition of a deck and the addition of a master suite as cost-effective improvements.
Readers interested in the entire study can log on to Remodeling Magazine at www.remodelingmagazine.com and click on “Cost vs. Value” on the home page. But the study tells only part of the story. Some home improvement projects make perfect sense in certain neighborhoods but no sense in others. Homeowners, for example, should refrain from adding a master bedroom suite if such a project would make their residence the most expensive in a neighborhood. Homeowners will struggle to sell a $200,000 house in a neighborhood filled with $100,000 homes.
“Before starting any project, I would talk to a Realtor,” said Joe Wade, pro sales associate at the Home Depot store on North Avenue in Chicago. “The best place to start is always with the person who knows the area best. They’ll know the values of the homes around you and can tell you when something you’re considering will price you right out of the neighborhood. Ideally, even after a home improvement project, you want your home to be in the middle of the neighborhood’s price range.”
Those homeowners that tackle a major home improvement project without first considering the quality of the homes surrounding them are taking a big risk, say real estate professionals.
“You always have to remember that your house, no matter what you do to it, is only worth what someone is willing to pay for it,” said Pete Thomas, president of Mundelein’s The Home Improvement.com, an Internet-based referral service that links contractors and homeowners. “All the return from these home improvement projects is based on theory. But if you live in a rundown part of town, it doesn’t matter how nice you make your home, people are not going to pay a lot of money for it.”
If you are eager to tackle a major renovation project, and your neighborhood can support it, your best bet is to work on your kitchens and bathrooms. Not only does the Remodeling Magazine report support this, so do local real estate agents.
Lisa Cokefair, branch sales manager at the Buffalo Grove office of Baird & Warner, an independent real estate company, says that updated kitchens and baths not only increase the number of potential buyers for a home, they also boost the amount of money these buyers are willing pay.
“It makes a huge difference,” Cokefair said. “Especially if you have a house that is 20 or 30 years old with all those greens and golds in their kitchens. If buyers are looking at 10 homes and they see one that has that updated kitchen or bathroom, it makes a big difference to them. If buyers find a home that already has those rooms updated, which means they don’t have to do it, they are willing to pay more for it.”
Jim Knight, a Realtor working from Houston-based eRealty.com’s office in Chicago’s West Loop, says that sellers with homes featuring outdated kitchens and baths are at a disadvantage.
Model homes
“The buyers coming to your house all see the model homes that have just been built. They compare these to the existing homes they’re looking at. That’s what a seller is competing against. The direct competition is the new-construction model, and it’s hard to compete against that if your house is not updated,” Knight said.
Kitchens and baths are not the only rooms homeowners should target when considering cost-effective home improvement projects.
Andrew Stern, regional manager with the Arlington Heights office of Toll Brothers, a luxury home builder based in Pennsylvania, recommends that owners consider adding sun rooms, greenhouses, walkout basements and flexible bonus rooms that can be used as dens, offices, family rooms or recreation rooms.
“Of course, these rooms might not be right for every buyer,” Stern said. “But if you find the right buyer who is specifically looking for one of these rooms, then it can pay off.”
`Lighten and brighten’
Owners should also remember that they don’t have to spend a lot of money to get a big return from a home improvement project. HomeGain, an Internet-based service that matches home sellers and buyers with real estate agents, surveyed real estate agents across the country, asking them to list the top low-cost home improvements. Agents said homeowners would do well to “lighten and brighten” their homes, something that, according to the survey, typically costs $86 to $110 and adds $768 to $935 to a home’s sales price.
According to the survey, homeowners who improve their home’s plumbing and electrical systems spend $338 to $381 and see a boost to their home’s sales price of $922 to $1,208, while those who paint interior walls spend $1,453 to $1,588 to increase their sales price by $2,342 to $2,600. Readers can find all the survey results by logging onto www.homegain.com and searching the company’s press releases.
Frank Lieberman, owner of the Mr. Handyman store in Northfield, said little improvements can make a big difference. For instance, homeowners should give their doors a fresh coat of paint, both inside and out, when it’s time to sell.
“You only get one chance to make a good first impression,” Lieberman said.
But home improvement specialists warn of one thing: Don’t waste time on a minor improvement until you’re almost ready to sell.
“Say you have a stress crack in one of your interior walls. You don’t want people to look at that, but there’s no sense in fixing it two years before you’re going to sell,” Lieberman said. “That crack might come back again when it’s time to sell.”
