By doing things right, you may be as successful as Donald and Christine Harvey. The Fairfax, Virginia, couple — she’s a stay-at-home mom to 6-year-old Michael, and he’s a vice president with a large staffing firm — loved their location but weren’t crazy about the builder’s grade fixtures in the home they bought for $525,000 in 1999. So at the end of 2005, they gutted the place and created their dream home. Today, the Harveys live in a five-bedroom, 6,500-square-foot French country-inspired manse complete with a saltwater aquarium and top-of-the-line kitchen.
The national housing market is still a risky business and will probably stay that way for a while. But the Harveys proved that through proper planning you can renovate your home to your specifications and increase its value. They created a luxurious villa that they plan to enjoy for another 10 to 15 years. “Every time we come back to the house, we go ‘Aaahh,’ ” says Christine, smiling. “We just never tire of it.”
DON’T RENOVATE YOUR WAY INTO THE POORHOUSE
In economics, it’s called the law of diminishing returns: The more you put into a project, the less you get back. While every home and community are unique, it’s a sound principle to keep in mind when it comes to home improvement. “The important thing is for the consumer to make sure they don’t over-improve for their area,” says NAR’s Foreman, because buyers compare sales of other homes in the neighborhood to determine a property’s fair value.
It’s usually a better investment to own the least expensive home in a great community than the priciest. “You never want to have the most expensive house around, a $2 million home in a $1 million neighborhood,” says Foreman.
So what should you do? Target your renovations to meet local expectations. Some buyers might expect hardwood floors, but you don’t need to buy wide-plank Brazilian cherrywood. Imported Italian granite in the kitchen is lovely, but it might be overkill if a decent acrylic surface countertop would do the trick.
Spending no more than 25% to 30% of your home’s value on renovations is a rule of thumb, according to John Frazier Sr., owner of John F. Design and Remodel in Portland, Oregon. That means that a tricked-out, $250,000 kitchen may make sense in a $900,000-plus home since it would likely push the selling price into the million-dollar range. But “you never want to put a $250,000 kitchen in a $100,000 house,” advises Tamara Ruffin-Walker, a senior associate vice president with Bethesda, Maryland-based Case Design/Remodeling Inc., the nation’s largest full-service remodeling firm with franchises nationwide. “You should keep with the style and scale of other homes in the neighborhood.”