Additions, Renovation, and Remodeling – Will this help me get a better price when I sell my house?
Many times I am asked if making improvements to a house will raise the selling price. The answer is a definite maybe. It depends on what you improve and what it costs to make the improvements.
We are not talking about fixer-uppers that are in need of significant repairs. That is discussed in another blog post about what to fix in a fixer-upper. In this post, we are talking about a regular home that is in good working order, in decent shape that could be improved to capture a better selling price.
Some of the things that people consider for additions, renovation, and remodeling are adding another bedroom, playroom, and/or bath, a sun porch, upgrading a kitchen or bathroom, finishing off the attic and/or basement, and installing a swimming pool and/or Jacuzzi spa.
Adding a Bedroom, Playroom, or Bath
This is a great idea if it can be done in an affordable way. It is important to note that square footage of the house is a big consideration as well. Recent listings in Houston at the time of this post show a two-bedroom home with two bathrooms and 1,787 square feet located on Spring Shadows Park Circle in Houston selling for the asking price of $317,057. A larger home that is very close by on the same street has three bedrooms, three baths, and 2,286 square feet. Its asking price is $368,838.
The difference in price between the two homes is $52,781. The difference in square footage between the homes is 499 square feet. The larger home has a price of $161.78 per square foot. The smaller home has a price of $177.42 per square foot. The average cost of construction for new homes in Houston is $110 to $120 per square foot. This means the additional 499 square feet in the larger home would cost $54,890 to $59,880 to build. This cost is more than the difference in sales price for the additional square feet.
Clearly, if these two homes are in similar condition the larger home is a better deal. However, the additional square footage did not result in extra profit, so if the homeowner built this extra bedroom and bath as an addition to make a profit, they did not recoup their investment.
Adding a Sun Porch
This is a good idea because it makes the home more attractive and spacious. It can create extra profits because a sun porch costs on average only $50 to $60 per square foot to build.
Upgrading a Kitchen or Bathroom
This is potentially a good idea if done for a reasonable budget because having a new kitchen look and contemporary bathrooms makes the house more attractive.
Finishing Off the Attic and/or Basement
This makes the house more sellable because it creates more usable space, but it does not increase the square footage, which means not too much will be gained from an increased sales price.
Installing a Swimming Pool and/or Jacuzzi Spa
A house with a swimming pool and/or a Jacuzzi spa usually sells for more, but there are fewer buyers because not everyone wants the maintenance expenses of taking care of these features. Additionally, the higher sale price will not usually cover the construction costs of installing them.
Summary
Many upgrade their homes because of reasons other than trying to maximize the sales price. They do it to make the home more enjoyable to live in. The best bets for increased value and profits from a higher sales price are upgrading the kitchen, bathrooms, and adding a sun porch.