Are you thinking about remodeling your residence? Remodeling may not be a bad idea if you plan to continue living in the house for a number of additional years, but if you want to remodel because you think it would be a good investment, consider the following excerpts from The Wall Street Journal (2-7-97):
Home improvements have never been great investments when it comes to recouping at resale. . . . [S]urveys, though, show that certain remodeling jobs . . . do pay off much better than others. . . .
Kitchens perpetually provide the best paybacks. A little cosmetic touch-up in the kitchen is, in fact, the best investment a person can make, returning 94% on every dollar – provided you get a professional-looking job.
Generally, bath remodeling is a good investment: A new one pays back 91%, a merely updated one 77%.
The aforementioned article also provides average returns (or pay backs) for a number of other items, including the following:
|Family room addition||83%||Screened porch||48%|
|Deck addition||72||Concrete in-ground pool||44|
|Built-in media center||62||Hot tub||41|
|Extra fireplace||61||Tennis court||34|
|Hard-wired security system||58||Upgraded landscaping||31|
Keep this information in mind when you are getting ready to sell your house, especially if you are feeling pressure to do extensive remodeling because you believe that remodeling may help you to sell your residence faster. If you are considering remodeling your kitchen and/or adding a new bathroom, you will need to decide what the trade-off is, since the financial benefit of selling your house several months sooner may offset a significant portion of the loss that you will incur on these types of remodeling. On the other hand, the loss you are likely to incur on most other types of remodeling is less likely to be sufficiently offset by the financial benefit of selling your house several months sooner.
If you decide to have your house remodeled or repaired, but you need someone else to do the work, there are several steps that you should be sure to take.
- Get firm written estimates from several contractors. Not only may there be a wide range between the highest and the lowest estimates, but you also may get useful ideas about alternative ways to do what you want. And, be aware that just because a contractor was the low bidder on a previous remodeling job that you had done, you should not assume that contractor will be the low bidder on the next remodeling job you want done – in fact, that contractor could make the highest bid, especially if he already has commitments for several other jobs.
- Before signing a contract to have the work done, check on the contractor’s reputation. You can contact the Better Business Bureau, friends and acquaintances, and the references provided by the contractor. If you cannot get favorable comments from at least three different sources, you probably should give serious consideration to using a different contractor, even if another contractor might charge significantly more to do the job.
- Also before signing the contract, make sure you agree with — and have an adequate understanding of — all the conditions and terminology.
- If you do not agree with the terms of any part of the contract, negotiate with the contractor. He may be willing to make a change, but you may need to be willing to compromise.
- If you do not understand one or more of the conditions or some of the terminology, have the contractor provide an explanation that you do understand – preferably in writing.
- Do not assume anything that is not stated in the contract.
- The contract should be very specific with regard to the types of materials to be used and which items will be paid for by the contractor.
- The contract should make clear that there will not be any changes in the job specifications unless both you and the contractor agree on those changes, including who will be responsible for paying any additional cost.
- The starting and completion dates of the work to be done should be stated in the contract, but they will need to allow for reasonable delays.
- Include a hold-back clause in the contract to allow you to withhold final payment for at least 30 days after the contractor has finished the work, so he will have incentive to come back sooner, rather than later, to fix anything that has not been done properly.
- Having your lawyer review the terms of the contract will provide you with additional confidence that the contract is sound.
- Even if you decide to hire a contractor to remodel or repair your house, consider doing some of the work yourself and/or hiring another contractor to do some of the work. If the primary contractor has not already provided you with written cost estimates for each component of the project (e.g., carpentry, electrical, painting, etc.), request him to do so. Then, decide if it would be worthwhile for you to do some of the work yourself and/or to hire another contractor to do the work for a significantly lower cost than the primary contractor would charge.