Not All Home Improvement Projects Yield Returns, Appraisal Institute President Warns Homeowners
CHICAGO (May 10, 2010) – Homeowners looking to upgrade or sell their home this spring should realize that not all remodeling and renovation projects will yield a full return on their investment, the president of the Appraisal Institute said today. The Appraisal Institute is the nation’s largest organization of real estate appraisers.
“When it comes to home improvement projects, especially in today’s economy, not every renovation or remodeling effort will pay off when the owner sells their home,” said Appraisal Institute President Leslie Sellers, MAI, SRA. “Consumers need to be aware that cost does not necessarily equal value.”
For consumers looking to upgrade and possibly sell their houses this spring, Sellers has put together a quick list of advice that real estate appraisers often share with homeowners.
Here are “Leslie Sellers’ Tips for Home Sellers”:
Sellers also recommends that homeowners who are serious about knowing their home’s value hire a professional real estate appraiser. Appraisers can help by providing honest, ethical valuation advice regarding which renovation projects will yield the greatest return on investment.
- Emphasize the essentials over the extras by investing in basic upgrades, such as fresh paint (use neutral colors) and new fixtures.
- Know that curb appeal is vital; exterior projects can sometimes provide a greater return on investment than interior projects.
- Avoid over-improvement by sticking to what's proportional in your neighborhood.
- Consider adding a bathroom, bedroom or renovating the kitchen, which are appealing features for home buyers.
- Projects that add square footage to bring a house up to – but not significantly beyond – community norms typically yield good returns.
“Smart financial choices start by knowing what’s standard in a community and how to improve a home so that the homeowner can maximize return on investment while limiting liabilities,” Sellers said. “Getting accurate knowledge of how different improvements can impact the value of your property is where hiring a professional real estate appraiser with local market knowledge can help determine which home renovations make the most dollars and sense.”
Appraisers provide unbiased, data-supported opinions of value that are governed by a federally-mandated professional code of practice. An appraiser can help a homeowner consider different renovation options by conducting a feasibility study, in which the appraiser will analyze the homeowner’s property, weigh the cost of rehabilitation and provide an estimate of the property's value both before and after the improvement.
To locate a professional appraiser in your area, visit www.appraisalinstitute.org/findappraiser. For more consumer advice on remodeling and renovating your home, download this helpful brochure from the Appraisal Institute www.appraisalinstitute.org/findappraiser/brochures/Rmdlng_n_Rhab.aspx.
The Appraisal Institute is a global membership association of professional real estate appraisers, with more than 25,000 members and 91 chapters throughout the world. Its mission is to advance professionalism and ethics, global standards, methodologies, and practices through the professional development of property economics worldwide. Organized in 1932, the Appraisal Institute advocates equal opportunity and nondiscrimination in the appraisal profession and conducts its activities in accordance with applicable federal, state and local laws. Members of the Appraisal Institute benefit from an array of professional education and advocacy programs, and may hold the prestigious MAI, SRPA and SRA designations. For more information regarding the Appraisal Institute, please visit www.appraisalinstitute.org.