No doubt, there are countless projects you'd like to tackle around your home. But before you go into project-planning overdrive, it’s important to be selective. Some changes can actually devalue your home. “Be sure that you balance your needs and your wants," said Angie’s List founder, Angie Hicks. "Maybe you want a new deck, but you need a new furnace and only have money for one. Be sure you invest in those needs first because it will be a better return on your money.”
Whether you’re planning to sell in the near future or you just want to grow your investment, you want to make sure you are investing in projects that add value. Home improvements not only make your house livable, but certain projects can garner a high return on investment.
Here are three blunders to avoid:
- Addressing WANTS before NEEDS: Home improvement projects are not equal – some might even detract rather than add to your home’s value and you don’t want to invest in a dream item when repairs are needed. Think of it this way: you may WANT a new deck, but you NEED to replace your aging water heater. Can you afford both? Do what’s smart.
- Over-investing in a remodel: Remodeling the kitchen or the bathroom are the two rooms that get the best return on your investment – about 85 percent. The key here is don’t overdo it. For example, if the majority of homes in your neighborhood have laminate countertops, you may reconsider adding granite. Focus on items that can add value to your home so you’re keeping up with the Jones’, not out-spending them.
- Not taking the time to do your research: A project installed poorly won’t add value to your home. Do a little leg work to check out contractors before hiring. Check licensing, insurance, references, estimates and read the contract before signing. By taking time to find a reputable contractor, you will save money in the long run and increase the value of your home.
"Remember, kitchen and bathrooms are the best things to invest in because they get the best return on investment, usually around 85 percent. But don’t over-invest here. The goal is to keep up with the Joneses, but don’t be the leader in your neighborhood. If your neighbors all have two bathrooms, don’t put three in your house," said Hicks.
Beware of these improvements that may actually detract from your home’s value:
- Unless yours is the only house on the block without a pool, don’t dive in! In most cases, you won’t get back even half of the money you spent when it’s time to sell the house.
- Home offices and sunrooms aren’t a good idea either. A buyer may want that space for something else – like a bedroom or playroom. The return on the investment for these projects is about 60 percent or less.
- Sprucing up the garage is fine but don’t go wild. Again, unless you’re the only house with a 1 or 2 car garage, adding another bay won’t be worth your money when it comes to the re-sale value of your home.