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Are your client’s home improvement projects actually decreasing the home’s value?

Not every home improvement project is an upgrade – some may leave your client’s bank account empty and turn potential buyers away.

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Home improvement projects can require a significant time commitment and huge financial investment. Homeowners make improvements for a wide variety of reasons, but almost all expect to increase the resale value of their home according to the money they put down.

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Know your buyers’ needs

Unfortunately, not every project will yield the resale value that homeowners hope. For those of us in the real estate industry, it is important to give smart advice to our clients before they begin a major renovation.

Always research your market and decide which upgrades will add to your home’s appeal without pricing it out of the market.

If your client lives in a neighborhood where comparable houses are being sold for millions of dollars, then it makes sense to add some high-end features. But if houses in their community sell for $150,000, adding a luxury bath and entertainment room will probably mean losing money in the long run. Ironically, small projects often make the biggest difference in terms of adding resale value to a home.

Here are some common upgrades that homeowners should be wary of:

Luxury Bathrooms

Bathroom upgrades rarely regain more than half their original expense. Buyers want to see clean, useable bathrooms, but many aren’t impressed by over the top features like waterfall showers, fireplaces, whirlpool tubs, and expensive tiling. These features may not appeal to the preferences of your buyer, and can require unwanted maintenance. If your client plans to remodel their bathroom, remind them to remain practical. A nice, modern shower is likely to be a better investment than a high-end tub.

Swimming Pools

According to HouseLogic, in-ground pools only increase a home’s value by 7 percent. Not only are pools expensive and hard to maintain, they can be hazardous for small children. Many potential buyers won’t consider buying a home with a pool, especially if they live in an unaccommodating climate. Above-ground pools are an even worse investment, as they can actually decrease the value of your home. Many buyers will remove the pool immediately upon purchasing the home, or negotiate for it to be removed as part of the sale.

Wall-to-Wall Carpeting

Although new carpeting can really help spruce up a room, it is quick to show signs of dirt and wear. Also, prospective buyers may dislike the carpet color and texture you choose, or prefer hard wood or tile flooring.

Sunroom Addition

It can cost anywhere from $30,000 to $50,000 to build a sunroom. As one of the most expensive upgrades, it’s very important that homeowners build their sunroom to match the climate. In Minnesota, you will likely get more value from a four-season porch than a patio. According to Remodeling, sunrooms return only 48.5% of money expensed.

Built-In Aquarium

Although they might look cool at first, built-in aquariums are another feature that requires difficult and expensive maintenance. Potential buyers must either take on the responsibility of upkeep, or spend money to remove the aquarium entirely.

Garage Additions

Most one-car garage additions cost an average of $20,000 to $40,000, and homeowners are unlikely to recoup the full price in resale. Though the extra space might be convenient, buyers are often willing to settle for a standard two-door garage for a better price.

High-End Landscaping

Expensive landscaping may improve curb appeal, but it may also discourage buyers that don’t want the extra work or have different landscaping preferences. Simple landscaping is less likely to deter buyers, especially when it looks nice year round and requires little to no upkeep.

Built-In Electronics

A home movie theatre and media room may seem tempting to your client, but potential buyers may easily perceive these features to be a drain on energy costs and a poor use of space.

Personalized Décor

Home improvements should appeal to people generally—not just your particular family. Quirky designs like bright pink walls and colorful tiling might just turn buyers away. Neutral designs are always more likely to increase the value of your client’s home.

#HomeImprovement

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Hannah is currently a writer and student in Colorado Springs, pursuing her master's degree in Creative Writing at the University of Denver. Before becoming a Staff Writer for the American Genius, Hannah wrote website content and grant applications for a law office in central Minnesota.

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Homeownership

Startup can 3D-print homes that are up to code in U.S.

(REAL ESTATE) The first ever 3D-printed home has been created that is up to code in America – it’s affordable, and could crush the elitist tiny home movement.

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This is America – you know it’s not cheap to build a house these days. In fact, HomeAdvisor reports that the current U.S. national average cost to build a home comes in at just under $300,000, or about $150/square foot for a 2,000-square-foot home.

Sadly, this price is out of reach for many Americans’ budgets, so what are those with limited funds supposed to do?

One answer in recent years has been the tiny/manufactured/prefab house industry, a trend toward homes with smaller footprints with roots in the minimalist and green-building movements. But this option is not without its obstacles, often pertaining to jurisdictions not keeping up with the code and zoning issues surrounding these smaller, sometimes off-grid homes.

And another issue has popped up: Some of these so-called “tiny” homes are still relatively quite expensive per square foot and can take a long time to build (for those going the custom route). In fact, many believe that tiny homes have become a badge of honor for elitists.

These limitations and obstacles seem to have left a wide-open hole in the market for fast-built, low-cost homes that could eventually be built on a mass scale. Enter ICON, a construction technologies company based in Austin, Texas, whose website says it is “leading the way into the future of human shelter and homebuilding using 3D printing and other scientific and technological breakthroughs.”

The company announced last year that it has built the first permitted, 3D-printed house on site in the United States.

The 350-square-foot home was created in approximately 48 hours of total printing time and for around $10,000 (printed portion only). ICON predicts that the production version of its printer, which they named the Vulcan, will be able to print a single-story, 600-800 square foot home in under 24 hours for less than $4,000.

But you won’t be able to buy your own 3D-printed home from ICON quite yet. The company currently isn’t working with individuals, choosing to focus on its partnership with the nonprofit New Story. Together, they plan to tackle housing shortages around the world. In fact, the Austin house serves as a prototype for the work they plan to do.

While there is some (understable) criticism of the tiny home movement — mostly due to the more elitist, ridiculously expensive trends making waves in the industry — what ICON is doing seems like a major step in the right direction.

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Homeownership

Which remodeling projects increase a home’s value the most?

(HOMEOWNERSHIP) Knowing which projects to tackle when a home is being put on the market can save a lot of wasted effort and money.

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If you’re looking to help your clients to identify which projects to tackle before putting their home on the market, look no further: the National Association of Realtors surveyed thousands of real estate agents, industry professionals, and consumers on interior and exterior house remodeling projects — these are the best projects for upping a home’s value before listing it on the market, ranked on the most value and cost recovery a homeowner can get.

  • Refinishing hardwood floors. Start from the bottom to earn top dollar. Refinishing floors transform a home from worn-out and aging to vibrant and inviting, and only costs about $2500 according to the National Association of the Remodeling Industry (NARI). The project also increases a home’s value by that same amount, meaning a homeowner can recover 100 percent of the costs. Pretty sweet deal.
  • Upgrading insulation. Because it’s what’s inside that counts. This project costs about $2100 based on NARI Remodeler’s estimate, and increases a home’s value by $2000 according to Realtors surveyed. That’s a 95 percent cost recovery.
  • Adding new wood floors. If you don’t have wood floors to refinish, add them in! This costs about $5,500 according to NARI Remodelers, and the increased sales value is $5000–a homeowner can recover 91 percent of costs from a new wood floor addition.
  • Replacing HVAC system. A new HVAC system adds energy efficiency and refreshes the entire home, and NARI Remodelers estimate doing so costs $7000. The increased value for sellers is $5000 according to NAR REALTORS, meaning an easy breezy 71% cost recovery for homeowners.
  • Converting a basement into a living area. Not only is this cost and space efficient, it’s also undeniably trendy. A basement makeover costs about $36,000 according to NARI Remodelers estimate, and increases value for sellers by $25,000 according to Realtors surveyed. That comes out to a cost recovery of 69 percent.

Which projects are the most costly?

In case you’re curious, these are some of the most expensive remodeling projects:

  • New master suite. More like master $$$uite — this costs about $112,500 with a cost recovery of 53 percent.
  • Converting an attic into a living area. Cute idea, but also a $65,000 one with a 61 percent cost recovery. One might say the price is through the roof.
  • Complete kitchen renovation. This project costs an estimate $60,000 with a 67 percent cost recovery. Even more if you want to throw in a brick oven, and you probably do.
  • New bathroom. With an estimated cost of $50,000 and a 52 percent cost recovery, make sure you aren’t flushing money down the drain with your bathroom addition!

These trends change over the years, so make sure your knowledge is up to date locally since we all know local trends trump national. Hopefully today you’ve garnered some ammo to help clients better understand how to improve their home’s value!

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Homeownership

Real estate continues to be a top wealth generating vehicle

(REAL ESTATE) From an investment perspective, real estate continues to be the top source of wealth in this nation, even after the economy suffered in past years.

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Franklin D. Roosevelt said, “Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”

Roosevelt died almost 75 years ago, but the sentiment remains true. Even after the Great Recession of 2008, real estate is regarded as a safe investment. But will it build wealth?

According to the Morgan Stanley Wealth Management Investor Pulse Poll, 77 percent of millionaire investors own real estate and 35 percent own related investments.

The poll asked about alternative asset classes and professional investment advice, but its findings that relate to real estate are especially convincing arguments to use when asking a person to invest hundreds of thousands of dollars in real estate.

Why is real estate different from other investments?

The American Genius talks a lot about cryptocurrency, stocks and alternative investing, but real estate consistently has value, not only for high-dollar investors, but also for average Joes. Investorys buy in hopes that an item will appreciate to be able to sell it for a profit – gold, art, jewelry, and crytpocurrencies typically sit in a vault until you’re ready to sell.

Real estate, on the other hand, has the capability of pulling in money each month. Hopefully, the rent you can take from a property is more than the expenses. Unlike other investments, where you really taking a gamble on appreciation, with real estate, you can crunch the numbers to make sure your property *will* generate income.

You’re not betting on whether the price will rise. As long as the cash flow covers your expenses, you’re safe.

Real estate continues to have the best chance of building wealth. Most investments do appreciate, but it’s at the whim of the markets.

Real estate gives you options to increase the value of the asset without waiting for the market to improve. Fix and flip properties are a common method, but investors don’t have to buy a fixer-upper to add value to a property. Combining inflation, appreciation and equity improvement, it’s easier to see how real estate can give you big results.

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