Renovations – Return on Investment

Over the years I have had many people ask me the question, “Should I renovate the house that I have, or should I move?”. We have all seen the numerous charts that show the return on investment of various renovations. I just checked a few of those charts and found the following results: Remodel your kitchen anywhere from 70% to 103% return, depending on who wrote the article. Add a bedroom, 80% vs. adding a master suite: 73%.

Every time I see these charts showing the percentage of return, I put them down thinking that none of them actually answer the question and none of them are the least bit accurate. One house might achieve a 200% return on investment, while another might return 25% with the exact same renovations.

The first consideration is the location of the house. Let’s take two identical houses. In one of them you can see cars going by at a steady pace and you are considering in your list of renovations new, triple pane, sound proof windows to block out the traffic noise. The other is an “interior lot” in a quiet neighborhood. Clearly the return on investment in renovating the house in the quiet location will be much greater than the return in the noisy traffic location, even if the two homes are identical both before and after the renovations.

The second consideration is the functional obsolescence of the style or “flow” of the house. I don’t like to disparage a certain style of home, so let’s let the builders do that for me. If you currently own a style of home that is no longer built. If no or very, very few homes are being built in the exact style of your current home anywhere in the country, then you likely live in a functionally obsolescent style that will be discounted below the value of other styles in your neighborhood. You can spend thousands and thousands of dollars renovating that home and return only $.25 on every dollar that you put into it. This would be particularly true if the style and flow are not in tune to the needs and desires of today’s home buyers and it is also in a noisy location.

The highest return will involve correcting a specific type of functional obsolescence. The charts may tell you that adding a bedroom may return 70% and adding a bathroom may return 85%. In truth, adding a 6th bedroom to a 5 bedroom house and a 4th bathroom to a 3 bath house, may return you next to nothing, especially if that extra bedroom and bath is in the underground basement. But adding a 3rd bedroom and a bath in the form of a master suite to a 2 bedroom, 1 bath rambler on a great lot in a great location, can easily return double your investment dollars.

Worth mentioning is the question, “Should I add a second story?”. Not if the footprint of the main level is too small. Again we are back to the issue of functional obsolescence. If the footprint of the home is 790 square feet, adding a second story would not irradicate the functional obsolescence of the small size of the main living areas. My opinion is that the main floor should be about 1,200 square feet for one to consider adding a second story, unless you can expand the square footage of the main level at the same time.

So back to the question. Should I stay (and renovate) or should I go (sell and buy a different house).

If your current house is not a style that you would build today, and if your lot is not located in a place where you would build a new house today, then you should sell it. Limit your investment dollars only to those things that will produce the highest return, like painting it inside and out and beefing up the curb appeal and making what you have better. My limit for this type of improvement is no more than 1% of the current value of the home. If you could sell it today for $450,000, then only put $4,500 into it and put all of that $4,500 into material and do the labor yourself. Same as getting a house ready for market, even if you are staying.

If you have a perfect location but an obsolete style, then you should consider building a new home on your existing lot. If you have a great house on a great lot that just needs to be updated, then by all means you should stay and renovate the house.

If you and your husband or wife don’t agree on what you should or shouldn’t do to your existing home, invite me to dinner and I’ll make you a list 🙂

110 thoughts on “Renovations – Return on Investment

  1. Pingback: Cobb Real Estate Blog » Blog Archive » Home Improvement Linkage

  2. I am considering adding a basement to a newer home that just has a crawl space right now. I was wonder if you know of any good contractors to request a estimate of the cost for this type of project and is it typically a good investment?

  3. In my experience, if a builder built an entire neighborhood of homes without basements, there is a reason why he did not put basements. Do any of your neighbors have basements? If it is a large 3,200 squre foot home with at least four bedrooms and quality construction valued at $750,000 or so, it may be worthwhile. But if it is a small home with so-so construction, it likely would not add as much value as the cost to do it.

    Email me with the particulars of the house, and I will give you comps of your home as is vs. homes with basements for you to compare against the cost. It sounds like it would not be a walk out, daylight basement, but a fully underground basement, which would not value as high.

  4. I have an older house (build about 1920, I think) in Highland Park, about a mile from Westwood Village in West Seattle. This neighborhood is growing in popularity, so I know there’s good value in the location. However, the house is very out of date.

    It would list as 3 bedrooms, but the third is actually a tiny den. Only one bathroom. About 1200 sqft on the main level, and 1100 in the unfinished basement. Plusses: laminate floors in the main areas, spacious living room, family room, and dining room.

    However, other than the front living/family double room, the floor plan is rather segmented. The kitchen is very outdated, and it is tucked in the very back corner of the house. The living room and dining areas are separated by a doorway (no door). Also, there is a side door, but no back door, and the only window looking out on the back yard is a small one in the tiny den.

    Also, the basement does take in some water during heavy rains. Keeping the gutters repaired and clear does help minimize that, but I don’t think there’s a feasible way to eliminate the problem entirely. This means that the basement is okay for storage as long as things are kept off the floor, but couldn’t really be finished into living space.

    To sell the house, I would want to at least put on new siding (the old siding is in bad shape) and gutters. Would it also pay to put in new windows, while I’m at it?

    I think that new cabinets and countertops in the kitchen would make a big difference, too. But I think that, in terms of making the house more appealing, what would really make a difference would be a more major remodel. Taking out some interior walls to open up the space, making the den into a breakfast nook, putting a sliding glass door to the backyard in the back wall and a modest deck outside, and possibly making half the living/family room into another bedroom. Adding a bathroom would make a big difference, too, but I’m not sure where it would go.

    And there is the possibility of building upward.

    What do you think? Which improvements would be likely to more than pay for themselves? Since I can borrow against my equity and I’m not in a hurry to sell, I’m most interested in whatever will turn the biggest profit, even if that means a major remodel.

  5. Angi,

    I would definitely get some basement waterproofers out there with a guarantee so that you can finish the basement. 1,100 square feet is a lot of wasted space and wet basement create problems all the way around.

    You would clearly get more return from even 800 sf of finished space in the basement moreso than putting in new windows. New windows has one of the lowest returns. Are the ceilings high enough to put a bedroom and bathroom in the finished basement if it were waterproofed?

    Eradicating the negative of taking in water and getting another bedroom and bathroom, maybe two, on the lower level is where I’d go first. Then kitchen. What kind of siding do you have?

    Email me a picture of the exterior so I can see the style.

  6. I don’t have a photo handy, but the syle is a very plain rambler. With the short side facing the street. When I bought it in 1996, I almost passed it by because it didn’t look possible that it had as much space as the listing claimed. (It did.)

    The siding is cedar shakes, and even though we painted a year ago, in many areas it looks like the paint is peeling. But it’s not actually peeling paint, it’s the shakes themselves coming apart. So that has to be repaired, and given that, I think it may actually be cheaper (and add more value at the same time) to put on vinyl or the fiber-concrete siding.

    The basement right now is divided into several rooms, though some walls have water damage at the bottom. And the windows aren’t nearly large enough for legal living space, but if it can be waterproofed then I assume windows can be put in. It could easily be turned into at least a laundry room, bathroom, rec room, and two bedrooms, plus one or two small storage rooms. Possibly even make one of the bedrooms into a master suite, and a second kitchen in the rec room for MIL potential.

    For that matter, if the basement was fixed and finished, I might be more inclined to keep the place than to sell it, especially if I could rent the basement out as a separate unit (the house is rented now).

  7. All excellent ideas given the curb appeal shortcomings.

    On the siding, I’m for hardiplank vs. vinyl, as it gives you more options to update the color scheme as trends change. No wood or wood based products! But, given what you’ve said about the short side facing front, that is not likely a good investment at all.

    If you email me the address, I’ll make sure to peek at it when I’m over that way, which should be pretty soon. Ardell @soundrealty.biz

    I like where your brain is going!!

  8. I am planning to finish my basement in my town home, but am slightly concerned whether the return on investment will be positive. It is likely that I won’t be staying in this house for more than 2 years.

    The basement is 900 SF and we are planning to finish about 600 sf with bath and shower. The plan is to make one big playroom for pool table and entertainment center.

    The town home is 2200sf without the basement but only has 2 bedrooms + a loft. That is why we thought this additional space would be an added value for out-of-town visitors or entertainment, and ofcourse for resell purposes.

    I can do the entire project for $13K with a nice ceramic tile floor and whatever else goes into finishing a basement.

    I recently bought the house for $410K in, what a realtor, would consider a great location, and I am wondering, based on your experience, whether this sounds like a good idea.

    Besides what I have described I know there are a ton of other parameters that could be factored in, like the market conditions at the point of selling, which is obviously impossible to predict.

    Looking forward to hear from you!

  9. I so wish people would say “I live in Houston, Texas” or give us some idea of where they live when they ask these questions.

    But general answer is yes based on several points. The answer might be no if you paid $375,000. But at $410,000 you might be able to get to a price point of asking $449,950 by the time you sell. So adding $13,000 to $410,000 brings you to $423,000 with room to negotiate. Adding the extra living space would likely be worthwhile unless NO townhomes EVER sell where you are for that price.

    The key is, can someone get a single family home for $450,000 where you live? If not…then you are not encroaching on the next tier value point.

    Hope that helps.

  10. If you can find a few sales at $430,000 or above that are similar to your house with finished basements or even without finished basements, then go for it. But do it for yourself, to make the home more enjoyable for you and yours.

    You might just “get your money back” if you sell it too soon. Like $429,950…so don’t over do it. You might want to ask the agent who you bought it with or who you would sell it with, before you spend the money. That’s what I’d do.

  11. Hi. I am looking at house right now to “flip”. It is around 1100 sq ft. The rooms are small. There are “two” bedrooms. (one is REALLY REALLY REALLY small and the master is also small but average bedroom size) My fiance and I are wondering if it would be worth adding a master suite to the attic? Or would a den/extra living space be more profitable??

  12. Master suite to the attic would be my vote. In fact I live in a house with a second floor master suite being the only thing on the second floor 🙂

    A warning however is that mine is really a two story addition from the ground up with additional square footage on both levels. In your case you need head room clearance if you are simply outfitting within the current roof line/ceiling.

    If you have the kind of attic where you can only stand in certain places, where the walls at the end are short and the headroom is an issue…could be a problem. I’ve seen people put a lot of money into these, and when the bed goes in people can’t get out of bed without hitting their head on the ceiling, or go the toilet without ducking under a gable.

  13. Crystal,

    I am assuming you already bought the house and whether or not is a good house to purchase for a flip is “a horse that has already left the barn”. If that is not the case, come back.

    One of the biggest mistakes flippers make is buying the wrong house in the first place. What they do thereafter is sometimes “good money after bad:.

  14. We haven’t purchased the house yet. It’s definitely a contender for us though because of its charm, but we are still actively looking at other properties. We aren’t looking to flip immediately either,we plan to live in for a couple of years while working on it and then sell.

  15. Well that’s a horse of a different color. Buy it. Enjoy it. If it is appealing to you compared to other homes at the same price in it’s current condition, it’s likely a good choice.

    Just don’t sink more than 20% of the current purchase price into it, given its limitations. Make the improvements that you find useful and attractive. Others will likely agree with those choice when you go to sell it. Make the living space better as YOU would use it. Trust your instincts.

  16. We live on the East Side in Kirkland in a cul de sac which is a delightful family neighborhood. Our house was built in 1987 and we have gradually been updating, new roof,real hardwood throughout, all new appliances etc and we plan to continue to bring the kitchen and bathrooms up to date as well. We plan to live here for another five years. We have a 1000 sq ft unfinished daylight basement which is actually a huge 12 ft high crawl space which opens out on a lovely green space. We are considering a big investment, say $30,000 to build out this space into a large family room and one or two bedrooms plus another bathroom. Our house would go from being a great three bedroom 2 bathroom house of 1650 sq ft to a larger family home of 2500 sq ft with five bedrooms and three bathrooms. Similar 3 bedroom houses around us (same vintage) have recently sold well above the listed price in the $500,000 to $600,000 range with larger brand new homes going for a lot more. We want to retire in 5 years so the $30,000 is important. Do you think it would be a good investment to build out the basement? If so should we make it possible to be rented out which would mean putting in a kitchen?

  17. Kay,

    I also live East of Market. My gut says no on the kitchen in the basement, as most future buyers of real estate will not want a renter in the basement, nor is it likely legally zoned to do that.

    Some people compensate for tax increases, who have lived in their homes for a long time, and get supplemental income this way.  Or by renting out the ADUs here in Kirkland (apartments over garages).  But usually that is an MIL anywhere on the property (Mother in Law Suite) and not a legal rental. Supposed to be for family only, unless your house is in a multi-family zoned section of Kirkland.

    If you give me a ring at 206-910-1000 I’d be happy to pop by and give you my first hand on site advice. I’m on 10th Ave. between first and second. Maybe we are neighbors 🙂

  18. My house is currently on the market. The kitchen was redone in 1997. The kitchen has a natural finish maple floor, natural finish solid maple cabinets (good european hinges and roller drawers), a white formica counter, and white appliances. All are clean and still in excellent condition. A friend has suggested that clear finish maple and white formica are out of style and ugly and that I should consider making over the kitchen to help sell the house. None of the feedback I have received from brokers has ever been negative about the kitchen and since it is nowhere near being a basket case, I didn’t see the potential for much a return of investment. I figure that most buyers will end up customizing the kitchen to the latest color trends that THEY like anyway. What do you think?

  19. Jude,

    I never recommend a full kitchen remodel at time of sale. Just make sure it is priced right for what it is. This time of year, assuming you are local, if your price is $600,000 or less you should have an offer within 30 days. If not, you are likely at the wrong price for that kitchen. It could be many other factors besides the kitchen that are causing the house not to sell. So spending a lot of money on one thing is not the way to proceed.

    No one every really knows exactly why buyers are not choosing your home to purchase. If it looks the best it can, given what it is, and it is not selling…then price is the answer.

    Absoluely awful kitchens are sometimes not noticed, if the home is staged well. The kitchen may be dated, but make sure the things on your walls and shelves and counter are NOT also dated. Take a trip to Pier 1. I sometimes get my pictures at Levitz or Fred Meyer. Update the accessories, not old fashioned doilies or teapots or pictures of great Aunt May 🙂

    Don’t depend on broker feedback…it ain’t what it used to be. If 20 people have been through the house and no offers…Houston…you have a problem. No one coming means you are way overpriced. Lots of people coming and no offers means you are not “capturing your audience” and price doesn’t match what they are seeing. If the same person keeps coming back and back and no offer…it’s price.

  20. We are looking at homes in magnolia and queen Anne area of Seattle. In the 600,000 price range. They all need updating and reno’s of some kind. Is there a web site that gives you an estimate on cost for repaires and renovations? Lou

  21. With our old house the laminate tops were looking very dated. It’s not that they weren’t functional, (it’s just a horizontal surface after all) but they didn’t help the kitchen style-wise. The cabinets were ok and although we considered a reface we ultimately decided to do just a countertop replacement and purchased granite countertops through Costco. Wow wow wow- they turned out so beautiful we almost didn’t want to move! It’s hard to measure what our return on investment was but judging by all the positive comments we heard I think we probably made the right decision.

  22. Installed cost was a little over $4,000, which included the removal of the old tops and replumbing of the sink. I forget how many square feet but it was an average size kitchen (L-shape with small island).

  23. Thanks for the info, Sue. Nice to have numbers for people’s reference. Never heard of someone using Costco for granite counters. Sounds like that would be of interest to many. Appreciate your input.

  24. How thick was the granite used on the counter top in inches? Also were the edges bull nosed? Was this full slab or tile granite? Was the sink bottom mounted.

  25. Ardell,

    Are homes that are pre-wired for surround homes considered a plus? Is it common for people to get recessed can lights in the master bedroom and family room without a dimmer? Do these add value?

  26. The granite was 3cm thick (which the math works out to about 1&1/4″) and was made from full slabs. We were thinking about going with bullnose but then changed our mind to eased (slight rounded top corner). Our sink was undermounted. Hope that helps!

  27. Sandy,

    Don’t see canned lighting in family rooms or master bedrooms as adding value. A lot of places that used to use canned lighting, like over a wetbar in a family room, are now using pendant lighting. Same with over barstool counter areas inside/outside of kitchen. I’m switching out the canned lights put there in 94 in my home and replacing with pendants. I’ve already bought the lights and will show before and after photos when they are installed. I had to order special mountings to cover the canned light openings which are larger than the average pendant base.

    Wired for surround? Full Theatre rooms are very hot, I’m thinking I will turn the basement area into a theatre room in my house after my kids are all grown and really on their own. My middle child is turning 21 on Saturday. They have their own living room downstairs, but that area would make a great Theatre Room.

    Anyone know what those big cushy theatre seats cost? Are they affixed to the floor like they are in a real theatre?

  28. Ardell, are stainmaster carpets considered a plus? Also do people use berber style carpet for the entire house? Are ceiling fans considered a plus? How about A/c?

    I am also looking at on demand hot water heaters. I personally dont think the technology is just upto the mark there. aLso steep initial investment, while returns are slow. thoughts?

  29. Sandy,

    I’ve seen a couple of minor changes in trends that I will try to find photos for and post today.

    Stanmaster carpet? Nah, not in real estate anyway. Berber? Pretty much out. Ceiling fans? Doesn’t matter much. A/C ? It’s there or it’s not. None of those things adds value to the house at time of sale, as in higher offer because someone has those.

    I’ve only seen a couple of on demand systems. One was in Green Lake in a tiny bungalow where space was a huge consideration and it was up in the attic. This was a plus because the entire house could be destroyed if a hot water tank up in the attic ever blew. I don’t even want to think about it.

    I would like to see condos use them more, as a hot water tank going affects a lot of people in stacked units. Tank in a garage or unfinished basement area…to me the “on demand” is of value whenever the tank is in an area that would cause the most amount of damage if it leaks and fails or bursts altogether.

    I laugh though, because when I started in real estate inspectors were all recommending hot water tanks instead of on demand systems. The area I worked in had all of the hot water supplied by “on demand” off the oil burners. Don’t remember why they wanted everyone to have a hot water tank back then…early 90s. Oh well, “The pendulum swings”.

  30. Thanks Ardell, the photos and changes that u list will be very helpful. I find properties listed that show stainmaster carpets as a plus. I would say they are compared to a regular carpet, but not something like hardwoods that increase the value of the house. Thoughts?

    I have also seen homes listed at higher price cause of AC. Is this really a boost to value? I am personally against AC. we hardly need it in the pacific NW and its enviroment killer

  31. Sandy,

    Hardwood, even the new thinner version that can only be refinished a couple of times, is definitely in. Particularly Brazilian Cherry wideplank. I’m told the wideplank is twice the cost of the narrow plank.

    I have noticed that “wood under carpet” noted in the remarks just doesn’t have the same value as seeing the wood. People seem to view removing the carpet and refinishing the hardwood to be as costly as installing hardwood. Plus they don’t know if there are big and not removable stains in the hardwood when it is “under the carpet”. So to get full value for hardwood, one has to be seeing it vs. just hearing it.

    I’m sure seeing or hearing the word “stainmaster” might be a plus, but not in terms of paying more for the house or deciding whether or not to buy the house.

    My house has AC. I clearly would have bought it regardless and rarely, if ever, use it. I have a whole house fan which I love, and rarely use the AC. My house has a lot of West facing windows which causes the top floor to build up heat in the late afternoon in the summer. But West equals fabulous views of Lake Washington and the Seattle Skyline so I don’t want to close up the blinds. Would rather hit the whole house fan after the sun goes down and suck out the hot air and pull in the cooler air.

    I prefer ventilation techniques to air conditioning. Most newer construction has the new style windows with air vents and a timed ventilation fan in the washer dryer area.

    How is AC an “environment killer”? Regardless…FL and the valley areas of CA would have a hard time living without it. But I agree that here in the PNW, we really don’t need it except for a couple of muggy nights when the air outside is too hot for sleeping. A rarity.

  32. Hi Ardell,
    We are in a pretty unique situation. We have 5.5 acres (about 2.5 of it flat) in a desireable area in North Bend, WA. The house is a 1700 open floor plan with 3 bedrooms and 1.75 baths. The guy who originally built the house also put up a 2100 square foot pole barn with a bathroom. Unfortunatly he never permitted the bath. We’ve refinished part of the pole barn creating a 1000 sqft studio with a little kitchen and full bath. We currently use the space as a pottery studio, living room (the ultimate husband get away) and dry storage. While we did not take out any loans to do a number of upgrades, my husband has some medical concerns that may continue to leave him unemployed. I’m scraping by making the morgage. We originally paid 400K in 2001 and we really can’t find any comps in the area. A real estate agent in the area (who’s very conservative) said we’d probably see it go for 470 – 490k with cosmetic improvements. A 600 sqft cabin (unihabitable without substantial renovation) just went for 250k (with a questionable septic system and no place for a backup) and just down the road a home sold for 1.6 mil (it’s a very unique neighborhood). So our question is, should we be better off hold tight knowing that eventually my income will outstip with the house payments, do minimal improvements and get out, or invest in some substainal improvements (i.e. permitting the septic and adding a garage to the main house) and then get out? I just don’t know how to judge the return on investment given the unique nature of the property.

  33. Cindy,

    If your husband did not have those medical concerns at the time you purchased the property, and those may leave him unemployed for an extended period of time, as you say, seems you have had “a change in circumstance”.

    You said ” I’m scraping by making the mortgage” and asked ” should we be better off hold tight knowing that eventually my income will outstip with the house payments”

    Ask yourself this, if you had this situation income-wise in 2001, would you have bought it? How likely is your income going to increase enough in the next 24 months? If you just graduated from nursing school, for instance, then maybe you income will expand greatly in the next year or two. But if you’ve been earning about the same for years, and there is nothing happening now (like getting a masters degree) that would cause that increase in income, it may be time to quit while you are ahead.

    I will tell you one thing though, set your eye on where you would go BEFORE you put the property up for sale. Just saw this happen to someone whose husband was too ill to maintain the big house…guess what…they are buying another big house for the same money. Go figure.

    So don’t just think about selling, think about where you and your husband might go, and then decide. If you would be just as happy or more happy somewhere else without the financial concerns weighing heavy on you then don’t even think about it. DO IT! But don’t price it yourself. Get two more agents out there who really know North Bend well and sell property with acreage. Don’t second guess all three of them. Pick the average of the three or the high of the three. But don’t go over them all. That’s saying YES and meaning NO. Don’t go there.

    If you need some help finding two more agents, let me know. I’m in Vegas until Monday, but I’d be happy to help you do that when I return. I do not accept a fee for doing that, from you or from the other agent. Just have more access to sold properties and who sold them. Wouldn’t take me long to find a couple of people whose opinion you may be able to rely on.

    Best of luck to you. Email me if you need me.

  34. Folks Can you recommend lighting ideas for a celing that is 18 ft high in the dining room. I am looking for something contemporary/modern. Also please point me to lighting store that have good deals 🙂

  35. Sandy,

    That ceiling has got to be vaulted. I rarely see an 18 foot ceiling in a dining room. Mine is, but it is 9 feet at one end and 18 feet or more at the other end, and is not a flat ceiling. If you have that type, you have to measure the height of the ceiling where the table would be for me.

    I’m working on one of those now, but I’d need to know if the house is a contemporary or a traditional home and describe how the ceiling is 18 feet in the dining room. Is there a second floor on the house?

    I’ve just taken “before” photos of the dining room light, and will post the before and after pictures when the new one is installed. I warn you that if the ceiling is vaulted, it is a pain to get the right light AND to get it to hang straight.

    What kind of dining room table to you have in there, so I can match the light options to the “decor”.

  36. Hi Ardell, I wanted your thoughts in this home we recently saw: The sellers agent touted the deck addition to the house. The house is relatively new on education hill on a 4200sqft lot within 1/4 mile of redmond high. Very nice quiet neighbourhood. The house is nicely done with hardwood floor everywhere in the lower level. The back yard in the absence of a deck would have extended 17 ft to the fence and sloped slightly downwards in the last 3 feet. The home owners have instead added a nice deck 15 X20ft roughly, with some space for like veggie patches on either side of the home, but not much more “grass” areas. Is this “upgrade” really worth it? I am guessing the deck (has no steps etc on same level as sliding doors from kitchen/nook must have cost 5 to 7K$ atleast to put in. Are these upgrades or additions ones that give good return on investment? I can see advantages to this deck – if I had children and to entertain in the summer. But the rest of the year round the weather here is awful and we wldnt step out anyways. So in summary qns for you: 1) What would you do if you had such a back yard space – small, slightly sloping 2) Is this really good ROI kinda addition to home? 3) Is it popular in this area? Your thoughts would be much appreciated here.

  37. Sandy,

    Don’t tell me any more because I think I just saw the house. I can’t talk about someone’s house specifically, so let’s not figure out that we are both talking about the same house and keep it generic.

    You hone in too much on the minutae, Sandy. Have been doing that since I “met” you. Property doesn’t value that way. Deck/no deck is irrelevant to a home’s value, except if that deck takes you TO something OF value, like a water view.

    The issue is the size of the lot, and how much of that lot is usable. Two houses with the same size lot, but one has 2/3rds in the front of the house and the other 2/3rds on the back of the house and the other all on the side…different values.

    Sloping down is sometimes good…sometimes bad. Depends what it slopes “down” TO? For people who don’t like a lot of maintenance, if it slopes down to a greenbelt and wooded area, great for people without small children. Slopes down to fence between two houses. Slopes down to busy road 🙂 What’s behind the yard?

    Why do you feel like you are paying for that deck? The deck should not be that obvious in the pricing of the home. Generally, “no yard” because it is “all deck” is not a good thing. But the issue is not the deck. The issue is that the yard is so small in the first place, that a deck sucks up the whole yard.

    Property specific questions should be the ones you ask your specific agent for on site evaluation and valuation. Not really “blogtalk”. If you are trying to do it yourself, just have the agent who is going to write it, give the place a thorough check before it is “written up”. Combine all that into the reduced or flat fee for the service. You’ll have a lot more peace of mind that way.

    Not everyone needs that. But I think you do. Where’s your agent in all this? If you are trying to do a Redfin, just do a Redfin plus and pay a little extra for property specific evaluation/valuation.

  38. Hi Ardell, Definetely wouldnt want to discuss the particulars of the house here at all. That doesnt seem right I agree. I actually dont mind the deck idea at all even if it takes up most of the yard and just leads to the back fence of another property. Sadly will hardly use it in Seattle – given the rain! I think I should have phrased my question to you differently: If I was to buy a house and put in a deck without leaving much room for yard, is that a good ROI type of renovation? And I think you answered that for me. Small yard is generally a negative, but with “newer” homes isnt this pretty much a given these days.

  39. The people I have represented who wanted newer homes, did not want the small space they had to be “all deck”. and the ones I have tried to sell with small “all deck” yards, have been hard to sell.

    On the other hand, if you could make it a covered deck with a retractable awning, that would give you a place to barbecue, even if you brought the food into the house. Also, impossible to go out after a rain, even if it isn’t raining now, if the yard is all muddy. So the deck increases the number of hours you can go out back, because you can go out “on the deck” immediately after a rain, and not worry about mud.

    So…pros and cons. Six of one/half dozen of the other. Not a plus or a minus. The minus is the small yard.

    Sandy…I’m not a big fan of new construction OR condo converstions. It’s all about the location when it comes to new construction, and not the particulars EVER. Biggest mistake one can make is buying new construction at near peak pricing times. All the real negatives are overlooked when buying new, and all the negatives come back to bite you in the butt when you try to sell it as “resale” product.

    You absolutely need the market to be accelerating to buy new. I don’t like the prospect of brand new right now, with some exceptions.

    Just remember the same rule applies to new and newer, as everything else. For every 100 available, there are only 2-3 worth having. So if there are only 10 available, what are the odds that ANY of those is a smart move??

    Absolutely KEY to value of new costruction is square footage of the MAIN FLOOR!! Two houses. Both 2,200 sf. One has 970 sf on the first floor and rest of the square footage on the second floor. The other has 1,300 sf on the first floor and the rest of the sf on the second floor. Bigger main foot print house is worth more even if the builder prices them the same. On resale…the bigger main footprint will sell for much more.

    The spreads on new construction don’t equal reality and reality “sets in” at time of resale. Builder prices never equal reality on a comparative basis, as he is looking at profit margin. Some people will make money, and some will lose, from builder pricing, at time of resale. Unless the market goes up so much that no one can make a mistake regardless. I wouldn’t bet on that right now as that means prices will keep going skyhigh not only in 2007, but for 3-5 years.

    I wouldn’t take that bet right now.

  40. Ardell: More questions for you on ROI for home renovations:

    1) Adding a skylight to a room or bathroom. Note the home is in between 2 homes. No home in the front (open space protected area across street). Home at the back has a big yard. Lots of light already in the home thanks to lots of south + west facing windows.

    2) Pre-wiring for a flat screen TV above the fire place in the family room.

    3) Book shelves on either side of the fire place

    4) Upgraded powerful vent hood

    5) Wood (oak) heat registers on a oak hardwood floor

    6) Pendants over kitchen Island versus pendants hanging from a track system over formal dining table (instead of chandelier) Some thing like this over the dining table instead of the kitchen island: http://www.techlighting.com/appwindow.asp?aid=52&img=52&apptype=R&systype=MO

  41. Ardell: Sorry I hit post too soon 🙂

    7) Crown Molding in all rooms

    8) Rounded corners (bull nosed)

    9) Egg Shell flat paint

    10) Getting all windows wrapped

    11) Under cabinet lighting

  42. 1)Skylights help if you have low ceilings or in a dark room. If you have plenty of light, then skylights can be a pain vs. a plus. I don’t have any. Plenty of natural light in here without them and I hate cleaning them.

    2) A flat screen TV is great…just the wiring? I’d say yes for a condo with no room to put the TV anywhere else, but in a house with a big family room, I’d say no. Only if there is no other place to put the TV OR you are giving them the flat screen TV with the house.

    3) Depends on the fireplace and the house and the book cases. But generally built ins are out and free standing nice pieces are in.

    4) Upgraded powerful hood yes IF you have a fancy stove under it. No fancy stove? No fancy range hood to make the stove look “inadequate” by comparison.

    5) I’d say brass. I have brass. But no stong feelings one way or the other.

    6) Pendants, yes. I just added them to my house over the counter between the kitchen and family room where the bar stools go. I don’t like tracks, but that one is cute.  Individually installed is better.  Over the dining room table I’ve been switching more to up on ceiling lighting from chandeliers except my own home where I am switching out an old fashioned chandelier for a modern one.  The pendants are in, but not the chanelier yet.  Will post before and and after photos when I’m done. 

    7) Never crown molding in ALL rooms…too much of a good thing.

    8) bullnose on what? I’d say yes, but where? Drywall corners? Wood landing? Countertops? Yes for the first two and no for the last one.

    9) No to eggshell, yes to Swiss Coffee. Don’t know the brand of paint, just ask any Home Depot paint guy for Swiss Coffee. It’s almost white, but not, and no yellowy tones. Blends better with “Pottery Barn” colors and decor. Most builders are using it and you rarely hear the word “eggshell” any more.

    10) No to windows wrapped. I’d think there was wood rot under there. That’s a generalization. If the house is really cheap, you could wrap, but then ditch the other improvements accordingly on the inside. Mine have a protective border of some kind so the wood doesn’t get wet so they are “framed” with material that can’t rot, but not “wrapped”. Looks more attractive.

    11) I like under cabinet lighting I like over cabinet lighting. Depends onthe house and the lighting. I’ve seen some crappy methods that are worse than none.

  43. I’m trying to post the actual photo for you.  Pendants are so in and chandeliers can be pretty ugly.  I’m using a double bar piece.  I wouldn’t put that ceiling bar for the kitchen pendants AND the dining room, but if you use the single hung pendants and then this one in the dining room with matching pendents, that would work.
  44. Ardell: The photo you posted above here is what we plan to suspend from the ceiling (18.5 ft ht) above our dining table in the dining room. You cant see the kitchen island from the dining room. We dont have pendant lighting in the kitchen island area.
    Check out: http://www.techlighting.com/default.asp?page=products&subpage=systemapplic&apptype=R&sysid=1&nme=Applications
    Fifth photo first row, that going to roughly demonstrated track system will be suspended from the high ceiling by 6ft, the pendants will drop 6 feet from the track onto the dining table. Does this seem appealing?

  45. We are about to finish our basement in our house in the Montlake neighborhood of Seattle. In our plan we have room for 2 legal bedrooms and a full bath. It has a separate entrance through the backyard.

    We are debating if we should run plumbing and gas lines to make it a potential mother in law apartment. Do you think it is worth the additional cost to do this? Would a MIL unit be valuable for resale?

  46. Lisa,

    I am seeing more value in basements as added living space for the primary occupants, than in MIL’s right now, especially if the house above the basement level is small and has no family room in addition to the living room.

    What’s the total above ground square footage without the basement? Number of bedrooms and baths up?

  47. We have 1440 sq feet on the main level with 3 bedrooms and 2 full baths. The basement finishing would double the square footage.

    There is no “family room” now, just a large living room and formal dining room, plus an eat in kitchen.

  48. In my experience, people value a nice family room downstairs with guest bedrooms, more than an MIL with a second kitchen, for two story homes. Sometimes different for split entry homes.

  49. Hi, Ardell,

    Is it possible to realistically guesstimate ROI for an extensive remodel of kitchen and bath in Seattle?

    We have a 3 bed 1 bath on the east side of Capitol Hill which we really like. It’s on a busy street, but still relatively quiet, and the smallest house in a block of medium-sized to huge homes (some rentals, some owner-occupied).

    Most of the house is charming, but the kitchen and bath were victims of an incompetent or uncaring do-it-yourselfer, I’d guess maybe 20 years ago when the house was a rental. Think beautiful old-home bones marred by ugly cheap finishes and drawers that stick. On top of that, the bathroom layout makes a small room smaller; and like many turn-of-the-century Seattle homes, the kitchen sink is in the pantry, along with the only built-in counters or storage.

    We had fabulous remodel plans drawn up by an architect, which would rearrange the bathroom to feel more spacious, open the kitchen to the dining room and move the sink and appliances to a huge island, bringing in more daylight as well. Unfortunately the construction bids are WAY over the initial estimates. Mostly not in ways we can easily scale back (like finishes) but as a result of moving plumbing and needing extensive custom cabinetry to make it happen.

    We intially planned the remodel just out of respect for the house and the satisfaction of living in it. The initial estimates made us think we could afford it for happiness and, realistically, because the current kitchen and bath are scary ugly 🙂 We are not totally ROI-driven, but now that the estimate is close to 150K (!), we have to think about ROI to justify it (or not).

    How much of this money are we throwing away, and how much are we likely to get back when we sell? On the plus side, it will make the house brighter and much more livable, and look great, and we are in no danger of becoming the most expensive house on the block. On the minus side, it will still be a small house set back from a busy street. Maybe we should do something much more superficial – like paint, Marmoleum, and Ikea cabinets? Between school and employment, we have no idea if we’ll be in the house for two more years, or twenty.

  50. Tam,

    The short answer is No Way. But I think you already know that. Putting $150,000 and still having a 3bedroom, 1 bath house…I don’t think so.

    If you email me the address, I can give you a better researched answer. But based on everything you have said, make yourself as comfortable as possible and do what will look and live better for you. That will also look and live better for someone else and give you a decent return, or at least your money back.

    Without getting an extra bathroom near the bedrooms, it would likely be a waste of money. Can’t tell you where to cap the cost without knowing the house. My guess is you paid $500,000 give or take and it caps out at $599,950. WAG of course. and it’s not going to make it to $700,000, which would net you what you put into it and no more.

    Do you have off street parking?

  51. Hi Ardell,

    We have approx 1450 Sq ft home in Monroe WA. It is 3 bedroom, 2 bath house. It is 1.5 story house with the upstairs being just a bed and a bath.

    We love the area and have a fantastic view, but the main living area is fairly small. It is approx 20′ by 24′ with 13′ by 20 for the living room, 10’10 for kitchen and 10′ by 14 for dining room. Also there is a solid wall between the kitchen and living room and I prefer open kitchens where you can talk to people in the living room. It would be difficult to get the open kitchen style I like without adding additional space.

    How much would adding additional square footage gain us if we are not adding any additional rooms? All the sites I see, say adding a bedroom, adding a bathroom or adding a family room, but we would ultimately not be adding anything, just space. At a minimum we could add about a 100 square feet and have enough room for the more open kitchen I like.

    or…. we could go really big and add a two story addition out the front, adding probably 200 square feet both upstairs and downstairs. Giving us more room for the open kitchen, bigger living room and probably enough room to add either an additional bedroom or family room upstairs. Obviously this would be very expensive but would give us the house of our dreams.

    So the question is… which is the smarter choice. We will likely stay in our house for a long time.

  52. Improvements in Monroe can sometimes be very had to capture on resale. Moreso than in many closer in areas. Make the changes you want to make, and ignore the resale factor. Chances are if you simply make the home better and best for yourself, others will see the value in that.

    The issue is not so much where you make the improvement, but the cost of the improvement. Exterior appeal is a key factor. Don’t put marble heated floors and expensive new kitchens inside, if when you are done the outside looks like a double-wide 🙂

    Get three comps from within 1/2 mile of your house, and be careful not to over improve your house for it’s immediate geographic area. If everything near you has sold for $350,000, chance are you are never going to get $450,000 no matter what you do.

    If you are in an area of houses that look a lot yours and sold for more than yours at the time you purchased it, that’s a good indication that your improvements will have a return.

  53. P.S. If you are in that part of Monroe on septic…make sure your improvements match your septic capacity with the “local powers that be”. Changing a 2 bedroom into a 3 bedroom as an example, would require a change in the septic capacity, even if you don’t add square footage.

    Mentioning this for other readers vs. April specifically.

  54. I help out at Habitat for Humanity. Our current project (17 houses) have cathedral ceiling in the kitchen/living/dining area. Looking for ideas on how to suspend kitchen cabinets from the ceiling. A light weight soffit or metal bars or ? . Pictures would be great as I’m dealing with neanderthals.

  55. You mentioned obsolete styles of homes. Is the cape cod considered obsolete? I live in Lombard, IL. The average home sells for more than 300k, we bought our 50 year old cape cod for 355k in February of 2006. The style is very common in our area, but I don’t think anyone is building them anymore. Our house is bigger than average for the area, 4 br, 2000 sq feet, although there are lot of tear downs in our neighborhood. So our neighborhood is a mix of new, $600k+ homes and small, old 300k homes. We are considering these improvements: new siding, roof, granite countertops, and stainless appliances. Should we be spending this kind of money? Thanks!

  56. Jon,

    For the benefit of our Seattle readers, I have posted a picture of a “Cape Cod” in Lombard which is currently for sale at $338,900. Here in Seattle, we would call this a 1 1/2 story Craftsman home.  The one for sale in Lombard as seen on Trulia is a 3 bedroom, 2 bath of about 1,500 sf with a two car detached garage.  It has a new roof, vinyl siding, newer windows and updated baths, so doesn’t look like there’s a lot of upside potential for the improvements you are going to be making.  This home was built in 1949 and has newer heating and air conditioning and a partially finished basement.

    The functional issue of a cape is that a four bedroom two bath cape usually has two bedrooms down and two bedrooms up, one full bath down (which doubles as the guest powder room) and one full bath up.  The bedrooms on the second floor have insufficient headroom due to angled ceilings.

    Still, if newer homes are selling for over $600,000 the upside potential could be at $450,000 after improvements, if you have dormers on the second floor, giving you more windows upstairs.  A typical 4 bedroom cape would have a full bath at the top of the stairs and a bedroom to the right and a bedroom to the left with only one small window in each room under the angled roof eaves.  A better cape will have two dormers visible from the front on either side of the roof, giving each bedroom upstairs at least two windows.

    If you have dormers, the price could be $450,000 or so. You might want to go and see this house to make a comparison of current value with the upgrades that they have.  If you are making the improvements for yourself, I’d concentrate on kitchen and baths.  Sometimes a cape sells better with wood siding than vinyl siding.  Often you lose some of the charm of the cape when you switch to vinyl.  If you need a roof, you need a roof.  Not necessarily a big plus on the value.  Go with a 25 to 30 year shingle in a brown shade, as that adds more charm than a black roof on a cape.

    If you have no master, as most Capes do not, that is a value inhibitor, so I’d try to keep the kitchen remodel down to not more than $25,000 which is tough to do with granite counters.

    I’m hoping you have dormer windows 🙂  A 2,000 sf Cape should.  Here in Seattle, some have eyebrow windows rather than full dormers.  Either way, these two windows facing the front of the house (the pictured property has none) would be key to your answer.

  57. Hi,
    We are in the process of updating our 1100 sq ft, 3 bed, 1 bath brick ranch in our northern Chicago suburb of Skokie, IL. We’ve just completed a high-end kitchen remodel (stainless, granite, glass mosaic, etc.) and are considering creating a master bed/bath suite as the next project. This would be accomplished by sacrificing one of the smaller bedrooms which is adjacent to the master.

    1: Will sacrificing a bedroom to add a master bath negatively affect our resale value and/or ability to find a buyer? (we plan on also finishing the basement, but ceiling height is only 7’…there may not be appealing/legal bedroom space in the basement)

    2: For the master bath, we could fit a shower and tub, but we will probably have to make some size compromises to fit both comfortably. The room would likely feel more open and luxurious if we were to create a large, multi-head, sit-down shower and no tub. Would not having a tub in the master suite be seen as a negative by perspective buyers? (there would still be a tub in the second bathroom)

    Thanks!

  58. That’s a tough one, Sean. That’s a lot of kitchen remodel for a 1 bath home. Clearly any bathroom addition is needed, but to lose a bedroom over it is tough. Any second bath addition, with or without tub is an improvement. I think the sit down shower probably makes more sense for a two bedroom house.

    It’s six of one half dozen of the other. 1 bath is a negative and 2 bedrooms is pretty much an equal negative. Maybe you’ll get a gourmet cook with no kids who wants a master bath and guest room. Makes some sense. An older couple. It’s a lot of money to end up pretty much in the same place. But if you will personally enjoy the master bath, and don’t need the 3rd bedroom, then do what makes you happy.

  59. I own a Cape style house in Rhode Island with 1 bathroom. I am planning on adding a second bathroom in the attic. I am also adding a 4′ x 8′ closet. I will need to dormer this out. What type of return can I expect on my investment. I know most people are looking for 2 bathrooms these days. It is likely that we may move within 5 years. Also, any idea of what this may cost. I am not planning on doing anything radical in terms of design.

    Thanks,
    Derek

  60. I’ve got a question. I own a home in downtown Coeur d’Alene Idaho. It’s in a great location (walk to shopping, restaurants, lake, and resort) and I rent it out as a vacation rental.

    My husband and I are considering adding a main floor master suite to the house before we move in permanently. I’m just not sure if it’s a good investment. (Yes we plan to stay in this house for many years – but we tend to change our minds so who knows)

    The house is about 2800 sqft (including a remodeled basement) and has 2 bed & 1 bath upstairs with the attic converted into another bed and bath. There’s also a full bath in the basement. However, there is no master suite and no main floor bathroom. Do you think this would be a good candidate for a master suite addition?

    My house has a website with pics – don’t know if that’ll help

    http://www.vacationcda.com

  61. My house is in Encinitas, CA 92024, great location, but small house 1,700 sq ft. 4 bedrooms and two bath. I’m currently thinking of adding a second-story. The house could probably currently sell for $700,000. Already have done a full kitchen remodel and replaced counters, cabinets and sinks in bathrooms. I’m deciding on whether to add the second-story or sell and buy a bigger house in the area, which would be around $950,000-$1 million. Which do you think is best?

  62. Unless you are getting something great for going up, I’d sell it for the $700,000 and buy a new one. Yesterday I went out to a house that was purchased for about $300,000 and a second floor was put on.  We will be listing it for about $850,000. The second floor picked up an awesome view from the master suite and a deck. The footprint of the main floor was expanded the same amount as the addition to the second floor.

    If you will still have 4 bedrooms down and the main floor will look the same when you are finished, and there’s nothing gained by going up (like view) except another bedroom, better to sell it and get a house with 1,500 or so on the main level with no bedrooms on the main level, and a full second floor with 4 bedrooms up.

    The second floor access from a house built as a 2 story is most often better than when one is added. My house had a second floor added. It would have been worth a lot more if they tore it down and built a new house on this lot. Still the second floor master suite has an awesome view, and I love it. So going up is worth it if it captures a view.

  63. YESTERDAY, A NEW COUNTERTOP WAS INSTALLED BY GRANITE TRANSFORMATIONS. VERY POOR JOB AND HAVING PROBLEMS CLEANING THE TOP. WILL BE GOING TO SMALL CLAIMS COURT. SHOULD HAVE A REGULAR COUNTERTOP AND SPEND MORE MONEY FOR RESALE VALUE.

  64. Hi – I have been renting a 1000 sq foot rambler in Redmond for 3 years and am considering buying it. It’s close to Microsoft (Rose Hill/
    Bride Trails) and is on a big lot. The house is pretty dated and to have a modern floorplan would require gutting it and/or adding on. I would love to have a master suite (it’s currently 3/1 and 1000 sq ft – you do the math!) but I think it would take much more than that to get this house up to high resale standards and recoup renovation money. Specifically, if I added a second story, the kitchen, living room and three bedrooms downstairs would still be too small. I think if someone with big bucks bought it they’d just tear down the house and build a McMansion.

    Should I just plan on living with things how they are for 5 – 10 years and then either resell or subdivide the land? It seems like a renovation would cost much more than I can afford right now on top of buying the house (I’ll be lucky if I can swing that but figure since I already live here and we can do the transaction without a bunch of agent fees it would be a bargain).

    My other option of course would be to keep renting – I could take the money I’d save by not paying a mortgage, interest (yes I know I’d get some back in taxes but still…_), property taxes, insurance, upkeep, etc and invest in stocks… seems like real estate would be a better investment in my neighborhood though, right?

  65. It’s a very close call between renting and buying it and depends on the specifics. No fees doesn’t always mean great deal, for sure. Given its obsolete floor plan, how close to assessed value can you get it? 1.2X would be a deal, probably.

    Subdividing is easier said than done. Not all big lots can be subdivided, though I’m seeing one insane shortplat over in Bridal Trails Bellevue that you have to see to believe! Not sure HOW that one got through the approval process.

    I pass by there all the time. If you email me the address I’d be happy to give you a more specific opinion since you’re so close. My office is at the end of Bridal Trails-Bellevue and I drive back and forth between Kirkland and there every day.

    It will be more like if you can buy it for X then buy it; for more than that then rent it. As to adding a second floor…not likely a good investment. Better to add a master bedroom and bath on the main floor and keep it a one story. Though I have a story about a tear down that just sold off market in Bridal Trails for a million dollars. Big rambler. So if the value is close to the lot value, could be better to buy and put nothing into it. Depends on exactly where it is.

  66. I live in a neighborhood of “starter homes” and have occupied a 1500 sq ft single storey, bought new five years ago. New construction is ongoing in my neighborhood and surrounding areas and I’m looking to recoup the most money in an upcoming sale.

    I’m seeking your opinion on the return on investment of replacing the entry/living/dining room carpet with tile or hardwood flooring.

    I cannot seem to convince my spouse that this will offer a good return and make our home competitive in a neighborhood of new construction.

  67. 1) Where do you live as in what City?
    2) What is the age of your house?
    3) Is your lot larger than the new homes? That is generally the case with “old” vs. “new”.

  68. Ardell,
    I live in central texas in the killeen/ft hood area. my house is 4.5 years old – i bought it new in 2003. My section was in the first phase of homes. There’s now a second phase going up right behind my backyard and a completely different development of new homes going up across the main roadway. So there’s lots of competetion.

    My house is probably average size. larger homes are in the 2000 sq ft range and are 2-storey.

    Hope this helps

  69. are you serious? just e-mail pictures and you will tell us what to do? my daughter bought a house that is so out of date. It does not even have insulation. GO FIGURE! anyway, i am good at details but i need help on this one.

  70. ghhhh,

    So sorry I forgot you over the New Year Holiday! I was reluctant to get into it between you and your wife 🙂 It is so very hard to compete with new construction. So much so that “compete” isn’t even the right word. Really you can’t compete with new anymore than a used car can compete with a new car. There’s really nothing you can do to compete as to price. Hopefully you paid enough less in 2003 so that you can undercut the builders.

    If you think adding things so that you can get the same price as new is the answer, I’d have to be on your wife’s side on that one.

    Good luck!

  71. I live in a rural setting in Otto, NC on 2 acres of land. The house has 2 huge bedrooms upstairs each with its own outdated bathroom. There is also a big office space–where a closet could be added for a 3rd bedroom.

    I want the most return for my nenovation buck.We are currently redoing our materbathroom [taking out the puck green shower, etc.

    What to reno next? My husband thinks while we are doing the bath we might as well take up carpet and put in hard wood floors.

    I’m thinking, do the other [all blue sink, tub, etc] bathroom.

    Then do the kitchen and dining room. The kitchen is small, but we could take carpet up from dining room. Remove one cabinet, put hardwood floors down. Replace old counters, and reface cabinets.

    Which would be the most dollar wise investment to make in renovations. Thanks

  72. I strongly recommend that you consult a local agent before setting your overall budget for renovations. Often rural settings are the most difficult to sell given a limited buyer pool. The newer generation of homeowners often see too large of a lot, as a chore they aren’t willing to take on.

    You need to know what your house will sell for now, and what the maximum price might be after renovations. There is a huge variance in pricing in Otto from as low as $99,000 to as high as almost $3 million, with the average being $200,000 to $350,000.

    If your house is currently worth $150,000 or so, it can likely absorb more improvements than if it is currently worth $380,000 before improvements.

    The small kitchen and two bedrooms may suggest a limitation as to total value regardless of what you do. Say your house is worth $225,000 and no one wants to pay more than $250,000 because of the small kitchen. Renovating the rest of the house and still having a small kitchen, may not produce much of a return on investment.

    Two bedroom house with small kitchen can be limiting factors that can’t be counteracted by putting $30,000 into a master bathroom, when there is only one other bedroom.

    There are currently 50 or so houses for sale in Otto. You need to know about how many buyers there may be in your new after remodel price range, before determinig your budget for renovations. So consult a local agent on that, one who comes to see your house, before prioritizing the changes and making a max budget.

    Personally I’m confused about your carpet to wood floor in master bath. Usually a bath floor is more water appropriate than either carpet or wood.

    Your statement of “while we are doing this we may as well do…” is a common statment of not having set a firm max budget. Do that first, before determining where the most bang for your buck might be.

  73. Ardell, i live in tukwila WA, bought a house last year at the begining of cul de sac with new houses, but with one real eye sore (neighbors house) behind ours, my house is the only old one built 1940, needs everthing updated it’s 1100 sq. ft. 3 bdrms 1 bath, 1/3 acre lot…i have an 8 foot pitch in the attic, and am considering put in wall dormers to get more space and value out of it……is it a big deal to put them up without permits and should i even do upgrades for the area? i’m a transplant from detroit….

  74. moe,

    I wouldn’t spend a dime on upgrades except maintenance and cheap cosmetic stuff like paint.

    What I would do is get the home inspected every couple of years and keep it in tip top maintained shape. Keep it painted with good curb appeal.

    A well maintained home that looks good is your best bet with only one bathroom and 1,100 square feet. Lot values there aren’t enough for you to let it get into “deferred maintenance/tear down” condition.

    As to the specific improvement you are referring to and permits, not my field of expertise.

  75. Ardell,
    My spouse and I are seesawing and could use some advice. We are downsizing into a smaller home in Shoreline and wonder if we should sell or rent-out our home in Ballard. It is in a quiet desirable location and is 2200 sf, 4 bed, 2 ba with complete MIL in basement (almost legal). We have had the same tenant for 5 years now and that has made the mortgage work well for us. It is an oversized lot with a beautiful, park-like backyard. We painted the exterior and put in new windows, but the home needs rewiring and replumbing. How much do those upgrades typically cost? If you could afford to keep it, do you think it worth the maintenance costs and management hassles?

  76. Coincidentally, I have a friend considering whether to continue to rent or sell a house over in Green Lake. It has a lot of deferred maintenance. Here is what I have advised her.

    First know the cost of what the house needs whether you rent it or sell it. I am meeting her at the house this morning at 9:30 with a home inspector on a $200 seller inspection. It’s not as detailed as a buyer inspection, and so costs a little less than half the amount. This way she knows the big items the house needs, from the standpoint of a buyer and the buyer’s inspector, in the event she sells it.

    Some sellers sell instead of fixing, only to find that they have to pay for those repairs after the price is negotiated and when the inspection requests come in during escrow.

    The inspector will have a ballpark of what the cost is for each item as he calls it as “needed”. She can also get estimates for everything on the list from the inspector from actual service companies.

    She has owned the house for a very long time and has a ton of equity, but not a lot of money to make repairs if she doesn’t sell it. Due to her equity position, she could borrow out the money neeeded for the repairs. Due to the small mortgage, since she’s owned it for many years, she can cash flow even after borrowing out the money for the repairs.

    We will put it on the market after sprucing it up just a bit, not a major overhaul. Then she is going to weigh all her options based on the price at which it will sell. If it takes a long time to sell, she can’t keep carrying it with no rent, so the market will decide.

    If it sells quickly, she will not be surprised at time of inspection, as she will already know what the house needs from the pre-inspection. If the market responds poorly and she has no offers, she can decide whether to lower the price or rent it out.

    In the long run, the market will decide what she will do. If she reaches a point where she has to lower the price to sell it, she can decide again whether or not to rent it.

    If she decides to rent it, I have told her to be prepared to rent it for another 5 to 10 years and not 1 or 2 years. If she needs to sell it in 1 or 2 years, then better to sell now vs. later.

    Ballard and Green Lake, no difference, unless you have a lot that the builders want and your home is worth close to lot value due to it’s age and deferred maintenance. It only takes about 10 days on market to figure out if the builders want it and what they are willing to pay for it. 5 days even.

    Once you have all that info, you can decide based on real numbers. Gotta dry my hair and get to Green Lake for that inspection…

  77. I own a brand new home 2 years old in NH. I do not anticipate living in house for long time(1-2 years). I have a nice living & dinning room that is approx 300 sq feet & rectangle in shape. This room is currently carpeted & I am considering to install nice limintae or wood floor. If I was to live in this house for long, I would have install wood floor with my eyes closed but in this real estate market, I am not sure if I should invest $3000 for wood floor or $1200 for nice laminate, that looks like wood floor. I would need some help from exterts to answer for me what options mentioned below will give me better return on investment.
    Option 1: Install nice wooden floor approx $3000.
    Option 2: Install less expensive hard wood floor $2000
    Option 3: Install nice laminate floor $1200
    Option 4: Install inexpensive laminate floor $800
    Option 5: Do nothing , keep carpet.
    I have alredy installed laminate floor in my family room & it has changed its looks much better than carpet. It is also easier to maintain than carpet. But living & dining area is formal & I am not sure if I should install laminate in that place. Also my furniture is dark in Living & Dinning room, I was considering a neutral or light color for harwoor/laminate. but my family roon has darker shade. Do you guys think it is BAD idea to have 2 different colous of floor in a house. Your advise in this regard will be hightly appreciated.
    Thanks in advance.
    Raj

  78. Rajesh,

    Generally I’d say put a nice wood floor or leave the carpet. You could downgrade the value of the home if you put in cheap laminate in a formal area.

    The color of the floor depends on whether or not you can see one floor from the other from any point in the house. Generally speaking they should not be dramatically different and if they are visible one to the other, as close in color as possible. I’m assuming that they do not butt up one to the other from your description.

    I don’t know much about New Hampshire, but I doubt you will have much of a return on the investment unless the carpet is in need of replacement by the time you sell. A new floor now, that you will enjoy for a couple of years, is clearly better than carpet two years older than now by the time you sell.

  79. Ardell,

    Great blog!

    My husband & I are buying a home in New Haven, CT, and deciding how much to spend on renovating it. It’s next to a major university (where housing prices seem pretty stable), and this is a $530K rowhouse on a block of mostly $1MM+ single family homes. 5BR/3.1 BA, 2300sf. http://listingdetail.cyberhomes.com/Listing.aspx?OrgID=ctconnmls&ListingID=N273432

    The house is well maintained except the kitchen and bathrooms need updating. We’re thinking of doing a major overhaul of the kitchen and master bath and putting a hot tub in the back yard. Total investment will probably be about $70K. We’re also thinking of finishing the basement & turning it into a rec room (turning the 0.1 baths down there into 0.5 baths), for about $20K next year. If we can get back 50% of our investment when we sell in about 5 years, we’ll be happy.

    The few other rowhouses on our street are slightly larger and are all selling in the $600’s and $700’s.

    Does this seem like a decent investment?

    Thanks!
    Zoe

  80. Great looking house! Are those rhodies out front? Yes to everything. Seems like you are being very reasonable in your improvements and expectations as to return. The house certainly looks like it can support those improvements, and needs them as well. Great layout.

    I don’t know what a .1 bath is though. It says 3.1 baths.

  81. Thanks, Ardell, and wow, you’re fast!! We just found out what 3.1 baths means here – there’s a super-sketchy half bath in the currently unfinished basement. It works, but looks gross & the walls are concrete blocks. So we can make it into a nice half bath pretty easily.

    Your fan,
    Zoe

  82. Zoe,

    I call that a “service” bath, kind of for men only 🙂

    Answering a comment is like answering email to me, as I get an email when a comment is posted. I use outlook, so the email pops up onto the screen while I’m working. Outlook is a very efficient system and irreplaceable as far as I’m concerned.

    I tried a Mac and Thunderbird for the last six months, sucked. I’m back to my HP and Outlook.

  83. I got this quote from an Eastside company for heating and AC:

    2 90% variable furnaces
    2 13 SEER AC units
    2 Thermostats
    Eletrical work
    Duct parts
    Installation

    Total: $25,915.00

    The installation was roughly $15K alone. Is that a fair price?

  84. We have a townhome in Edmonds, approx 1400 sf. It’s 11 years old. We’re looking at doing some sprucing up and wanted some advise.
    1. We want to replace all the flooring, both downstairs (kitchen, living, dining room, .5 bath) and upstairs (bedrooms, 2 baths). Is it best to have wood (or engineered wood) flooring on the main floor and go with carpeting upstairs (except the baths) or wood in the kitchen/eating area/.5 bath and carpeting everywhere else? We’re going to continue to live here so we have to be happy with our choice. I’m leaning towards wood but can’t help but think it will feel cold 9 months of the year!
    2. We want to replace the counters and are considering granite or quartz. Any opinion on either one? Should we put the same counter in the .5 bath as the kitchen (you access the bath from the kitchen eating area). We currently have ugly laminate in the kitchen and tile in the bath.
    3. Our cabinets are light maple and in pretty good condition. We’re thinking of painting them an antique white because we really don’t like the current color. We don’t want to replace them and I think refacing them with a laminate wood would cost too much and possibly look cheap.
    All suggestions would be great!
    Thanks for all your help.

  85. Patti,

    I’m answering this on the rush.

    1) yes, wood on all of first floor on a townhome that is 1,400 sf is usually best. Get a big area rug for the “cold factor”.

    2) If cost is not the issue, go with granite and yes match the bath and kitchen. 1,400 sf on two levels is not large enough to play mix and match.

    3) Paint looks cheap too. Likely the best answr is to restain them a color you like better.

    Hope that helps!

  86. Pingback: Seattle Real Estate | The Seattle Specialist

  87. I am trying to settle an argument with my parents about a house I am buying in St. Paul, MN. It is in a great neighborhood near the St. Paul campus of the University of MN. It was bank owned and definitely needs some help: new roof, window sash replacements, and kitchen at the least. It is a one level, 2 small bed, 1 ba- under 800 sf. My parents are encouraging me to put on a second story since I have to tear off the roof anyway- 2 decent sized bedrooms and a bathroom. I am confident that we could get it designed in a way to integrate it into the style of the house, but I am worried about cost and over building the house. I don’t need room for more than 2, and eventhough the house is small, an addition seems more trouble than its worth. I am curious what you think…

  88. A/C and furnace Project Update:

    Installed Carrier 80 SEER Furnace…highest rating possible for a 5 Ton unit. Also added a 21 SEER A/C unit along with a new control unit.

    The system works awesome! The temp is so well balanced and the humidity has been completely eliminated. I don’t even care if it doesn’t add value to the house. I’m just so glad I can get some decent sleep on those very hot days.

    Next projects:

    Renovate basement to game/entertainment/guest room
    Add outdoor kitchen and patio

  89. Q-Diddy,

    Thanks for the update! You sound happy. Can you give us some cost data? Having cost data for viewing is a great service to those thinking about doing a project. What was your decision process regarding more expensive/less expensive?

  90. Total cost of the whole thing was $17K minus $1,100.00 for refunds. So roughly $16K all-in. I forgot to mention the air cleaner in my last post. This was such an improvement from the old one. Easy to access and a lot easier to clean.

    I was happy with the cost. It was in line with the lowest bid offered out of 4 and gave me top of the line equipment. I could have gone the more expensive route to get a higher rated SEER unit for the furnace, but I would have had to buy 2 units to get the same output.

    The total install time was 2 days and the job looks clean and compact. No over-built lines and ducts and it runs very quietly. My old units used to rattle the closet doors near the garage!

    My electric bill for June-July showed a slight cost increase from last year, but still not material. The high SEER rating really helped.

  91. We are in the process of placing an offer on a home with 2600 square feet of living space. This home has 5 bedrooms and a game room-all but two bedrooms are located in the finished basement. There are small windows in each room in the basement-with a very unattractive view of a retaining wall.

    We have a budget of 40,000 and was wondering if it is worth it to escavate outside and provide a outdoor entrance to the back yard from the basement? Included in our budget is redo bathrooms,update kitchen(perhaps extent it), paint, landscaping and flooring(carpet).
    We are hoping to flip it in about 2 months. Our first flip !

    Looking forward to hearing from you.

  92. Peyton,

    I don’t know where you are, but in Seattle bedrooms having small windows in basements is a fire code violation, even when there is a common door to the outside. Before you spend your money on other improvements, given 3 of the bedrooms are in the basement “with small windows”, make sure the window size conforms to local code for ingress and egress under the fire code.

    • We are located in Northern California. The basement windows are up to code- they are large enough to have a full size adult to jump out the window and onto the ladder located outside the window. They problem is that is does not allow much sunlight in the bedrooms. my thought was to excavate outside and have some french doors put in. Allowing sunlight and access from the backyard. To do this I would imagine would be costly and I am not sure if that would give me the more bang for my buck. California homes usually have no basement. What are your thoughts

      Appreciate it

  93. Hi Peyton,

    I lived in Granite Bay for a year or so, just outside of Roseville near Sacramento in Placer County.

    No matter where you are or what you do, the house is likely to value out as a 1,300 sf two bedroom house with a finished basement. Rarely will appraisers give the basement level the same price per square foot value as the above ground level. (I’m assuming it’s roughly 1,300 up and 1,300 down, total 2,600 or thereabouts).

    Not trying to diss the home choice, but I’ve seen french doors added that way and given the cost of excavation, I don’t think the added value will outweigh the cost. Mostly because the value of the lower level is somewhat contained by the fact that it is still a finished basement.

    Probably better to stage and make sure the area is well lit. Even leave the lights on or have lots of Open Houses as soon as it hits the market with all of the lights on. Pay the most attention and cost to the main level.

    I have had experience with a very similar home. Two bedrooms up, three bedrooms and a bonus room down. A door to the outside (you walked up some steps to reach ground level). There are several like that in Seattle and most often someone buys the house for the main floor, and ends up renting out the lower level. So they buy it based on how much they like the main level and the location. The basement is “an extra” with limited return on improvements.

  94. Hi Ardell

    Interesting website :-). We just moved into a 32 year old home in a wonderful old neighbourhood with the best schools in town. The house we moved in meets our requirements with a little bit of compromise. Some of the things we are feeling iffy about now after we moved into the house are

    Its a 4 bedroom home with 2 1/2 baths. It is good that one of the baths is a Jack and Jill connecting the kids and guest bedrooms.

    The Master bath has NO tub and a small closet. We are used to a huge 150- 200 sq ft closet and so even if this one has couple of storage units, it is a bit small. the closet connects to an open dressing area ( a step down from the main bedroom area) and the other side is the master bath area – with a nice walk in shower and toilet.

    We have also seen that the bedrooms has windows on the west side with the sun hitting full on. My kids are little and still take naps and even with the fan and AC it seems too hot.

    We renovated the floors before moving in – rippin out old carpet and replacing with a combination of tile and hardwood. IT cost about 14000 and we have zero carpte in the house. is this a good thing? Will I see an ROI? Do you have any suggestions for renovating the Master bedroom/bath area?. Thanks and I apologize for the long post.

    Regards
    Uganesh

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