Home Improvements that Add the Most Value

By Colleen Kane, CNBC.com

Projects geared toward the homeowner's particular tastes, like the addition of a home music studio, have the least positive effect on asking price.Projects geared toward the homeowner's particular tastes, like the addition of a home … Some home renovations pay off at a much better rate than others, according to a report from ISoldMyHouse.com, a for-sale-by-owner website.

"Projects geared toward the homeowner's particular tastes, like the addition of a home music studio, have the least positive effect on asking price," says Owen Gilman, President of ISoldMyHouse.com. "Projects that most anyone can appreciate, such as a revamped bathroom, tend to boost sales price the most."

Bryan Laing, director of brand strategy at the marketing firm Crack, invested $100,000 revamping his 1928 bungalow in Portland, Ore. last year. "The sexy stuff," says Laing, was the new kitchen, bathroom, refinished hardwood floors, repainted interior, new patio and landscaping.

The upgrades also covered some "not as sexy, functional stuff," like new siding and exterior paint, a new roof, and updated windows, insulation, plumbing and furnace.

Laing purchased the house for $270,000 in 2009, and he reports it was recently assessed by a realtor at $460,000.

He says the best money he spent was the $1,000 to 2,000 it took to hire an interior designer/architect to help with planning before starting renovations.

"Our designer helped us 'do the house right, and make it completely timeless in its design' according to the realtor who just assessed our house," Laing said. "We see so many older homes [that] have an '80's kitchen -which makes it really hard [to sell]. It's all in the planning."

Most everyone agrees that home improvements add value both for the present owners and for when it's time to sell. In a survey from Sherwin-Williams and National Association of The Remodeling Industry (NARI), more than a third of homeowners (35 percent) view remodeling as the most efficient means of increasing home value.

But which upgrades make the biggest difference? Let's look at those top fixes as ranked by ISoldMyHouse.com.

Replacement vinyl siding
It's not what Laing would call a "sexy" update, but a $9,000 vinyl siding job can add $8,000 to a home's asking price when it comes time to sell, an 89 percent return on investment (ROI).

Major bathroom remodel
Among those surveyed by Sherwin-Williams and NARI, the bathroom is the top choice for a remodel. A bathroom overhaul costing $13,000 can add $11,000 to a home's asking price, an 85 percent ROI.

Vinyl replacement windows
Windows are a functional update that are not so noticeable visually, but are much appreciated for improving energy efficiency. A $10,000 expenditure on new windows can bump up an asking price on a house about $8,500, according to ISoldMyHouse.com, for an 85 percent ROI.

Major kitchen remodel
In a survey commissioned by MasterBrand Cabinets, 27 percent of homeowners planned to spend between $10,000 and $24,000. And 35 percent of those remodeling kitchens were doing so to invest in the long-term value of the home. Homeowners who shell out $54,000 on a kitchen remodel can count on adding about $44,000 to their home's asking price, for a 81 percent ROI.

Basement remodel
A renovated basement can become an in-law suite, add guest or family bedrooms or even bringing in rental income before the home is sold. (See the CNBC slideshow: In-Law Suites) A basement remodeling project costing $57,000 can add $45,000 to a home's asking price, for a 79 percent ROI.

Roof replacement
Spending $14,000 on a new roof can add curb appeal and up the asking price by $10,500, for a ROI of 75 percent, says the ISoldMyHouse.com report.

Deck addition
A new deck is impossible to forget when potential buyers are touring a home, and for those costing about $15,000, they add about $11,000 to the asking price, for a ROI of 73 percent.

Smart renovations don't always guarantee results, of course, especially in the current real-estate market.
Chris Pomeroy, senior vice president at the realty firm Halstead Property, and his husband bought their house in Hudson, N.Y. in 2007, at the top of the market. Intending to eventually sell the home at a better price, they invested in renovating the entire pool area, the landscaping, interior decoration, and they added a new lighting system and security system for the house. Despite the improvements, they recently listed the house for less than their purchase price.

Pomeroy still believes their improvements will be helpful in selling the home. As he tells his clients, you don't always get back what you put in, and it's better to sell the house at the right price than to not sell it at all.

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