Valuation Management Group believes it is important to keep our clients and real estate appraisers informed about real estate trends. As you consult with your customers, this information could be helpful.
Which home upgrades result in the cost of the project equaling or exceeding the increase in the market value of the home? REALTORS® in markets across the country each year judge the effects of 35 home improvement projects on sales prices in Remodeling Magazine’s annual Cost vs. Value Report which is done in partnership with REALTOR® Magazine.
The 2014-2015 survey results were summarized as follows.
With home price gains slowing in most parts of the country, sellers will be looking for ways to get top dollar for their listing. Cleaning and staging make a big difference. But for some sellers—such as investors seeking to bring a property up to neighborhood standards before the sale—remodeling work may be the ticket.
As the 2015 Remodeling Cost vs. Value Report makes clear, large-scale jobs aren’t likely to return sellers their full cost. But there are improvements worth doing in anticipation of an upcoming sale. Some will return almost 100 percent of their cost. Others may not have as great a payback, but they can improve the market position of the property in relation to the competition. (Think about the impact of beautiful kitchen photos on online home shoppers.) In addition, several pricier projects can provide owners with a few years of enjoyment while still offering a decent payback down the road.
The article offers the following advice based upon the report results:
- Simpler, lower-cost projects tend to return greater value.
- First impressions are important.
- Kitchens still offer the most remodeling bang for the buck.
- Expect bigger payoffs in the Western United States.
Understanding the dynamic of cost versus potential return on investment in a project is critical to making educated and wise decisions. This knowledge also helps all involved in understanding market value appraisals when renovations, upgrades and remodeling have been done to a subject property. To read the full article and obtain a copy of the Cost vs. Value Report, click here.
While this is good information to make an informed decision about remodeling projects, a real estate appraiser may or may not agree with the proposed additional value for specific renovations for the market area or a home price range on major renovation projects. It is always a good idea to obtain a real estate appraisal to determine the current value and the prospective value after the proposed renovation. It would be important to have the plans and cost estimates for the appraiser at the time of inspection.
Valuation Management Group can assist homeowners nationwide with obtaining an appraisal to determine their home’s value prior to the renovation and the prospective value after the renovation in order for the homeowner to make informed decisions.
Valuation Management Group is a national, full service appraisal management service company that manages the appraisal process for banks, mortgage bankers and credit unions. We offer the full array of commercial and residential appraisal products and services. We take the appraisal process from ordinary to extraordinary.