Value-added upgrades
Home improvements that give you the best bang for your buck
Story by Sarah Gonzales
There is an important consideration that homeowners ought to take into account when planning a major remodel like a kitchen, or even a smaller upgrade like new flooring. We’re not talking about what contractor to choose, how long the project will take, or which materials to use – although these are all serious considerations, too. We’re talking about how much value a particular project will add to your home.
Adding value to your home through upgrades and remodels is a two-fold concept. It’s the idea that a completed project will enhance the current homeowner’s enjoyability of their home now, and will also increase the home’s price tag when that homeowner decides to sell later down the road.
Dave Doolen, president of JADA Construction, says that his clients don’t always ask about the cost-to-value ratio when discussing a new project, instead, “their first consideration is to improve their life,” he says. He brings the idea of adding value to the table: “When I engage people in an initial consultation I ask, ‘how long to do you anticipate living in your home?’ to get some idea of what their long-range perspective is,” he explains. “There are very few remodels that give you a dollar-for-dollar return on your investment, but you can recoup it over 5-10 years if it was money well spent in the first place.”
So what are the best projects for the money? Most contractors agree that kitchen and bath remodels and deck/porch additions are the most popular value-adding projects, but there are other kinds of upgrades that will boost value, too. Plus, deciding when to remodel and how much to spend can be just as important as deciding what needs a facelift.
Cost vs. Value
Stacey Dean, co-owner of Grayling Construction, recommends that remodel-minded homeowners check out the annual Cost vs. Value Report published by Remodeling Magazine. (Online at remodeling.hw.net.) “You look on the list for your region, then your city. So it’s pretty specific,” comments Dean about the geographically pinpointed cost breakdowns. The report lists the cost of the job, the resale value and then the percent of the job cost that can be recouped. For instance, in Anchorage, a garage door replacement is expected to recoup 96 percent of the cost and a bathroom remodel will recoup 79 percent, while adding a sunroom will only recoup about half of the cost of the project.
Dean says her company is commonly seeing upgrades that increase a home’s value like bathroom remodels in pre-1980s houses, while in newer homes many owners are opting to swap out carpet for hardwoods or laminates, and seldom-used jetted tubs for larger, multi-head showers. For clients who are looking to sell immediately, Dean says that it makes the most sense to upgrade flooring and repaint – anything more costly than this and “you might not get your money back out.” However, if you have time to prepare for a sale, she says: “Adding a nice front door and a nice light or a gable over the front door” is a great way to add curb appeal.
For those with the “typical Alaska split entry,” Doolen says that “one of the best bangs for the buck is to add the space needed inside for shoes, coats and hats, because typically these entries have tiny closets that don’t even begin to meet the needs of Alaskans. That’s a big one for adding value.”
Energy-efficiency projects pay back
Upgrading a home doesn’t always mean new kitchen counters, a deck addition or a larger master bathroom. There are plenty of non-cosmetic upgrades that can add value to a home from behind the scenes. “In the last three years, remodeling requests have changed from ‘I want’ to ‘I need’ upgrades, because of the energy upgrade rebates,” says David Northup, owner of Northup Construction, referring to the Home Energy Rebate Program offered by the Alaska Housing Finance Corporation. “We’re doing energy-efficient projects like replacing siding and windows, and putting in efficient boilers.” Replacing windows and doors generally recoups little of a job’s cost at resale, but improvements that up the Energy Star level of a home by one full step – say, from 3.5 stars to 4.5 – means a tidy rebate check from the government and lower energy bills over time.
Northup says that in places like the Kenai Peninsula or rural Alaska, energy upgrades will really make a big difference, especially in the winter, because energy costs are significantly higher in these areas.
Planning to sell your home? Brighten up!
If you’re a homeowner who is looking to sell within the next couple of months, what can you do now that will help ensure top dollar for your home when it comes time to negotiating a sale? Laura Halverson Dufour, a realtor and Certified Residential Specialist with Dynamic Properties in Anchorage, cites interior painting and carpet shampooing as simple ways to make the inside of a home sparkle. For the outside, “exterior painting is very popular to increase curb appeal – after all, if they don’t like the looks of it from the road they probably won’t stop to grab the flyer or want to see the inside,” she explains. “For homes that need remodeling or are outdated, many people will spring for a bathroom remodel or two, but hold off on the larger, more expensive kitchen remodel.” As long as your home is priced to appropriately reflect any remaining work that needs to be done, these smaller upgrades can make a positive first impression.
“I think spending anywhere from 1-2 percent to prepare your home for market is reasonable if it’s starting to show wear or is dated,” Dufour says. “If it’s an older home or you’ve lived there for 35 years, sellers should expect to spend money to prepare their home for market to get top dollar, or even market value.” Some sellers with newer homes won’t have to spend anything. However, she says that “adding brightness” is always worth it in any home. Painting lighter colors, removing bulky window treatments and having the trees near windows trimmed will instantly lighten up the place. “Buyers notice bright versus darker homes, and improvements in this area will pay off.”
