Home Improvements to Increase Your Bottom Line

For Sale By Owner (FSBO) is an excellent way to maximize the money you make selling your home while also minimizing the costs to sell. One method to improve the overall profit on your home is to enhance, enlarge or renovate rooms or areas within the structure. Today’s buyers will often pay top dollar for a larger-than-average master bathroom or a playroom for the children. In addition, today’s homebuyers frequently expect even starter homes to have at least two bathrooms.
However, not every addition will net you more profit. In fact, some additions do not add to the value of your house at all. Following are types of additions you might consider adding to your home along with the potential return on investment (ROI) you can expect to get at sale time.
Points to Ponder
Before you undertake any improvements to your property, take time to consider the following points:
Resist improvements that buyers may see as extravagant. A larger master bathroom is nice, but maybe you do not need to add his and hers Jacuzzis.
Opt for flexibility. You may want to build a huge library with built-in bookshelves across all the walls. Unfortunately, the next owner of the house may want to make the library into a child’s bedroom. Add things that can be used in a variety of ways, and stay away from built-ins that change the way the room can be used.
Make the additions fit with your home. Even if you are adding a new room or deck, make sure that the new pieces fit in seamlessly with the rest of the house. Homebuyers may not like a porch, deck or bedroom that looks tacked on to the rest of the property.
Look around the neighborhood. Do not improve your home so that it is the nicest one on the block. You will not be able to get your money out of it at sale time. Most realtors suggest that you improve your home so that it is only about 20 percent better than the surrounding properties.
The Best ROI
You want to make the improvements to your home that buyers will happily pay for. At the same time, you do not want to spend so much to improve your house that you cannot recoup the money when you sell.
The best return on investment comes from the following: a large kitchen remodeling project, adding another bedroom or adding a master suite.
ROI 90-125 percent
Replacing all the windows in the house (average cost = $5,000 to $10,000)
Major remodeling of kitchen (average cost = $20,000 to $30,000)
Adding an extra bedroom in the basement or attic (average cost = $20,000 to $30,000)
Creating a master suite (average cost = $30,000 to $45,000)
ROI 70 to 89 percent
Minor remodeling of kitchen (average cost = $7,000 to $10,000)
Remodeling the bathroom (average cost = $8,000 to $12,000)
Adding a bathroom (average cost = $10,000 to $15,000)
Adding a family room (average cost = $25,000 to $35,000)
Adding a second story to the house (average cost = $70,000 to $100,000)
ROI 50 to 69 percent
Adding a home office (average cost = $7,000 to $10,000)
Adding a deck (average cost = $7,000 to $15,000)
Bad ROI
Some projects are lifestyle improvements for the homeowner and do not translate well into extra money when selling the house. In general, these projects are either extravagant or very personal.
For example, expensive outdoor ranges and kitchens do not often recoup their costs when the house is sold. Wine cellars, saunas and green houses usually enjoy a similar fate. A swimming pool may be more of a necessity in warm climates. However, in colder climates, a pool can only be used during the summer months. Many homebuyers will not want to pay for the upkeep and security for such an item.

Don’t panic about the NEW Century news this week.

This was a case of what I have been talking to you about for some time. All those easy to get mortgages just coming due and a lot of those people not being able to make their now doubled payments. This is why I keep on stressing to you to read ALL your paperwork BEFORE you sign.

New Century was/is one of the larger privately owned what we call sub-prime lenders, and their investors( other bankers, private pension plans, people like you with cash to invest) got scared because they were not getting their payments from the bank. So….. They all called their loans at the same time and New Century had to admit that they did not have the necessary money on hand.

Not good. 1st, they are required by law to have a certain level in cash on hand; 2nd, they had not been able to collect their payments in more timely manner from their borrowers who are now shocked that their payments went for example form $1500 to $3000. Who knew that we would not be able to sustain 100% appreciation 3 years in a row? Oh, the shock and surprise. Now the feds step in mainly because of reserve requirements and secondly because this was a publicly traded company. Oooooopps. Don’t worry, all will not collapse. Just most banks will now go back and re-look at some of those loans they recently made with “no documentation” and more shakey appraisals.

Also, this is going to be a great time when I call/email you about investment opportunities, to take advantage of them.

The great news: We will all Live and Prosper


So, now that you have a slightly better understanding of this week’s latest “headline” news give someone you pass and extra smile.

Herm.