According to a recent article in the AJC, Americans are expected to spend more than $270 billion, yes billion, this year on home remodeling projects. Here is a brief summary of the recommendations in the article:
- Get at least two estimates from contractors
- Insist on references and follow up on them
- Pay for your project in thirds; one-third up front, one-third halfway thru and one-third on completion to your satisfaction
- Don’t automatically take the lowest bid (our recommendation- get more estimates if you’re unsure about the ones you’ve received)
- Make sure you have a clear and specific contract defining the scope of your project
- Make sure your contractor has sufficient liability coverage in case they damage your home or a worker gets injured
- Make sure that if you need a building permit for your project, it is in your contractor’s name
An important issue that was not vetted in the AJC article is the decision-making process involved in deciding what you should update or change in your home. Our experience is that generally homeowners make these decisions based on what they want to have in their home, sometimes without considering whether the remodel will add value to their home. Studies show time and again that home improvements never add value equal to the cost of the project. Generally, the best you can hope for is getting back a 70-80% on your investment in home improvement.
We often get calls from past clients asking whether they should go forward with home improvements they are considering, such as putting granite countertops in the kitchen, changing out carpet for hardwood floors, etc. Sometimes our response is clear-cut; for instance, is it really smart to spend $40,000 redoing a kitchen in a home you may only stay in another year or two and which will only give you $10,000 or less in return. More often the answer is less clear; spending a few thousand to have hardwood floors that you will enjoy for the next few years or adding a fence so that you can let your dog run or children play worry-free cannot be measured by value added to your home alone.
Sometimes the best answer is to buy a new construction or resale home- for instance, if you want a Keeping Room off your Kitchen or larger closets, it is not usually financially smart to take on a major renovation to your current home when you buy a newer home that already has the features you want. Remember that a home that already has the features you want is likely in a neighborhood where the other homes are similar in size and features, so you’re paying fair value to live in that neighborhood versus being overbuilt and overpriced in your current neighborhood.
To sum this post up, think carefully about your projects and whether they make financial sense, then do your research on who you hire and finally protect yourself to assure that your home improvements are done to your satisfaction.
Our favorite “pick” this week is a foreclosure in Woodstock at The Fairways in Towne Lake- this home was built in 1992 and last sold for $379,000 in 2003. It’s a large home with 4220 sq ft plus a finished basement; take care to check the siding and plumbing as defective products were sometimes used on homes of this age.
