Exterior changes add most value
| Homeowners who are considering additions or alterations
to make their home more attractive to potential buyers should focus on
exterior projects at the moment.
They should, says Institute of Estate Agents national president Willie Marais, spruce up outdoor entertainment areas with decks or patios, paint or recoat exterior walls and if they want to make structural changes, replace old steel windows with wooden or vinyl ones.
These are the implications of the latest cost versus value research conducted among estate agents by Remodelling magazine, which reveals that exterior projects are currently generating the best returns (over 80% compared to cost) when remodelled homes are sold.
The only interior projects that have generated returns of more than 80% in the past year, the research shows, are minor kitchen revamps. Other projects popular with homeowners trying to create a good impression are major kitchen revamps, which only delivered a 78% return on cost, bathroom additions (66%) and the creation of a home office (57%).
The survey also reveals once again that additions and alterations are often worth much more to the homeowner who intends staying on in the home than to prospective buyers, says Marais.
For example, home office conversions have been at or near the bottom of the cost versus value averages for several years, despite the growing trend towards telecommuting. This could be because people investing in a home office typically do so to fill their own specific need while prospective buyers with different space needs simply dont see the value, regardless of the cost.
Its also important to consider, he says, whether a home alteration will reduce the perceived amount of usable space. Converting a little-used storage space into a half-bathroom is an obvious gain in usable space. But converting a spare bedroom into a master-bathroom may reduce the number of bedrooms below the minimum expectation of potential buyers.
Similarly, the percentage of cost owners can recoup on a given alteration will depend on a wide variety of factors other than the project itself. These include the condition of the rest of a house, the value of similar homes nearby, and the rate at which property values are changing in the surrounding area.
So, where resale value is a major factor in a homeowners decision to remodel, we recommend that they should always first consult with a knowledgeable local agent and look closely at market conditions.
Article by: Institute of Estate Agents of SA