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THE TOP 4 MISTAKES IN REMODELING. |
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About to start that home remodeling project soon? Read these tips first.
For anyone who has ever put a home on the market, you know the feeling you get when you've spruced up the whole house for sale and inevitably some potential buyer tours your home says: "Maybe we should keep our house and just remodel."
This may be especially true when you look at the cost of replacing your house. In addition, the American Homeowner's Foundation estimates that it can cost up to 10% of a house's value to replace it with another, even one that costs exactly the same.
Selling one $200,000 house and buying another of similar value could set you back as much as $20,000. That's because real estate transaction costs are high, including agent commissions, mortgage fees, transfer taxes, attorney costs, title searches, surveys, movers and the like.
Staying put, however, comes with its own caveats. Here are our top four mistakes to watch out for in remodeling.
1) Don't price yourself out
You should not increase the value of your house to a point where it is the most expensive home in your neighborhood. This can backfire and make every other home more attractive because of the lower pricing, making it difficult to sell your house.
However, if your remodel simply catches your house up to the others in your neighborhood-say, adding a third-car garage to your home when all other homes in your neighborhood already have the same-this type of improvement could actually help with an easier sale.
Plan ahead and spend wisely.
2) Keep your budget in mind
Strive to keep your new mortgage payment in line with what you can afford on a monthly basis. You don't want to borrow more than you can afford to pay back on your monthly household budget.
The question of how much to spend on remodeling could also depend on whether the changes could be categorized as maintenance or remodeling. Maintenance improvements would be things like replacing the roof, carpet, or repainting. In addition, maintenance projects that focus on energy efficiency may have an even quicker payback than standard remodeling. Replacing windows, adding insulation and upgrading to more-efficient air and heating units are good examples. Regardless, you still need to make it all fit within your budget.
Interested in how much you can borrow?
· How much can I borrow? Find out with the home affordability calculator. I know how much I want to borrow, but which loan is right for me? 3) Target your improvements
Be smart. Get more bang for your buck.
Remodeling magazine conducts an annual survey of the remodeling projects that add the most value to your home. The survey compares how the same 18 remodeling projects affected home values in 60 different cities.
According to their survey results, the top five remodeling projects that paid back the most in return when you sold your home, include minor kitchen remodel (92.9% of cost recouped), siding replacement (92.8%), midrange bathroom remodel (90.1%), deck addition (86.7%), and midrange bathroom addition (86.4%).
It may also be important to consider how much enjoyment you will get out of the improvement. A home office, pool or gazebo may enhance your family's quality of life, but experts say these are examples of remodeling projects that rarely give anywhere close to 100% payback at resale.
4) Research your contractors
Know whom to hire.
Once you decide on a remodeling project, you still have to choose from among the estimated 800,000 companies and individuals who identify themselves as remodelers in the U.S. Experts advise asking some basic questions of a prospective contractor such as:
· How long have you been in business?
· Will employees or subcontractors be assigned to the project?
· How many projects like mine have you completed in the past year?
· May I have a list of references?
Don't rely on just one estimate for any job, as costs can vary by 10% or more among companies. And make sure you understand what is included in each bid so that you can accurately compare. On a roofing job, for instance, the grade of shingles, type of sheathing and kind of flashing could vary, meaning a lower bid might also represent lower quality.
In addition, one of the most important questions you may need to ask is whether the contractor has liability insurance -- for themselves as well as any subcontractors they plan to use. Don't hesitate to ask to see an actual certificate of coverage.
By sticking to these suggestions, you will enjoy your new remodel job both now and for many years to come.
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