Real estate experts point to inexpensive upgrades and fixes, such as painting in neutral colors, de-cluttering inside and outside the home, landscaping, changing furnace filters, and installing window treatments to let in as much natural light as possible as ways homeowners can boost the value of their homes. How much the boost will be varies by the scope of each project and the location of the home, so it’s best to consult a local real estate professional about what will add the most value to your home, suggests Kit Hale, a regional vice president of the Chicago-based National Association of Realtors.

A licensed contractor and a plumbing apprentice, Eric, 42, estimates that the renovations increased the $420,000 home’s value by $50,000. Except for assistance with painting from his wife, he did all the work himself, so his only costs were for materials. He spent $4,000 for the bathroom supplies, $450 to change the sewer line, $150 for attic insulation, and $2,800 for an energy-efficient wood pellet stove, for which the Baskervilles received a $1,500 energy tax credit. Energy-efficient appliances add value. Even if the house is not being sold, they can save homeowners money in the long run.

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In today’s shaky housing market, homeowners are becoming more circumspect, weighing the pros and cons of how the renovations they make will affect the bottom line, specifically if they’re trying to sell. This especially holds true with falling home prices. The average price of an existing home dropped about 13% between 2008 and 2010 to $172,900, NAR reports. The top-selling areas of a home are usually the kitchen and bathroom, which can be costly to upgrade. The national average cost of a minor kitchen remodel is $21,695, adding $15,790 to the value of a home at sale, while a bathroom remodel is $16,634, adding $10,668 to the value of a home, according to Remodeling magazine’s Cost vs. Value Report 2010-11.

Homeowners on a tighter budget who are looking to sell can appeal to space-hungry buyers, says attorney and real estate broker Tara-Nicholle Nelson, by installing built-in organizational systems such as bookshelves, closet organizers, and wine racks.

There are a slew of other inexpensive and mid-priced renovations or upgrades that can add value to a home, according to real estate experts. Here are a few:

1. Replacing a home-entry door with a steel door gives the highest return on investment of all mid-range and upscale home improvement projects, accordingto Remodeling magazine’s Cost vs. Value Report 2010-11. Nationally, the average price of a steel door is $1,218, but the cost is recouped at 102% at the resale of the house, the report says. For regional costs, visit www.remodeling.hw.net/2010/costvsvalue/national.aspx.

2. Replacing a garage door gives the second-highest return on investment, 84% of the $1,291 average price nationally, according to the report.

3. Painting is a great way to spruce up large portions of a house. The price of  paint for a home’s interior varies from $12 to more than $50 a gallon depending on the quality of the paint, according to Costhelper.com, a website that shows what people are paying nationwide for products and services.

4. You can scale back costs to a few hundred dollars by refurbishing items, such as replacing faucet and cabinet  door fixtures, re-facing cabinets, and upgrading light fixtures to energy-efficient designs, according to Bankrate.com.

1. Look for a hook. The Garage Door Co. has created its own safety campaign. Throughout the year, “we go out to schools and tell kids about safety. We go out with the fire department and talk to homeowners,” says Jamon.
2. Create educational events. During the summer, The Garage Door Co. hosts cookouts and invites local businesses. While everyone’s having a good time, “we offer free evaluations and tune-ups,” notes Jamon, “and we educate our guests about their options.”
3. Take the show on the road. To participate in home trade shows across the country, “we take down our whole showroom and take it with us,” says Jamon. Seizing the opportunity to speak to a new audience, “we go out there and push safety.”

Tamara E. Holmes is a frequent contributor to Black Enterprise.

It sounds like you and your husband are prime candidates for an FHA-insured “203(k)” or rehabilitation loan, created specifically for brave buyers willing to take on a house that needs work. The loan covers the purchase price of the home itself, plus the expense of remodeling. Lenders require a 3.5% minimum down payment, and this loan must be used for your primary residence—not rental property.

To get started, find your diamond in the rough and execute a sales contract, making sure the document states your purchase is contingent on approval of a 203(k) loan for an amount that includes the cost of repairs. Next, find a lender by visiting http://fhaoutreach.gov/lender/lender.do. You’ll then present the bank with a detailed outline of the planned improvements and their itemized cost. The bank will do an appraisal to determine the property’s value after renovations. Once you’ve been approved, the final amount of the loan will also include a “contingency reserve” of 10% to 20% of the repair costs to cover any additional work. At closing the seller is paid, and the remaining loan amount goes into an escrow account from which the borrower pays contractors. Check https://entp.hud.gov/idapp/html/hicostlook.cfm to find out the maximum amount you can borrow with an FHA mortgage in your area.

This article originally appeared in the February 2010 issue of Black Enterprise magazine.

The Smiths are happy with their new contractor, Lawrence Bailey. (Photo by Alex Jones)

After experiencing a home break-in this summer, Atlanta residents Jamilia and Charles Smith decided to look for a contractor to repair the damages. During the invasion, a burglar damaged the alarm system, broke the rear door of their home, and tore their flat-screen televisions from the walls in the living room and master suite, causing extensive damage to the walls. But they were soon in for another surprise.

The couple asked family and friends to refer contractors who had done work for them. They also researched how long each contractor had been in business, what kinds of jobs they had completed, and whether they worked alone or with a team. Charles, 41, and Jamilia, 35, received a strong referral from a friend and decided to interview the contractor. He told the Smiths he worked with a team and could repair the damages.

Much to their dismay, the Smiths soon discovered that the contractor worked alone, not with a team. Furthermore, he did a poor job on the painting and worked on multiple projects at once rather than completing one task before beginning another.  The Smiths had no other choice but to fire him after having already paid him $900. In hindsight, Jamilia believes that she and her husband should have spoken to more than one reference and visited a few of his previous work sites. Charles and Jamilia replaced the initial contractor with four different remodelers to do different projects. After the initial experience, they decided to hire specialists for each individual project––they hired someone to replace the door, someone to paint and do sheet rock, a contractor for electrical work and lighting, and someone for the wiring and mounting of the flat-screen televisions. The final cost was $4,000. Jamilia advises homeowners to go with their instincts. She also suggests, “If the contractor is doing multiple projects in your home, make sure they complete one project before they move on to the next.” Charles also adds that it’s important to discuss timeframes for completing the work upfront. “We were at his whim as to how fast or slow he’d work, which was a huge inconvenience,” he says.

If you’re planning to hire a contractor to do work in your home, make sure you follow these tips:

Start with your personal network. Ask your family and friends if they can refer you to anyone. Talk to neighbors who renovated their home. Once you narrow down your list, consult at least three contractors before making your final decision. “Free estimates are a good way to [broaden] your estimate,” says Lee Wallender, home renovations expert for About.com. “If you only talk to two contractors, one estimate will seem high and the other will seem low. If you get three, then it’s more precise. If you get five, it’s even more precise.”

Inquire about work history. Find out how long a contractor has been in business. “Ask how long they’ve been in the area,” suggests Scott Plemmons, senior vice president of specialty sales at Lowe’s home improvement store. If a contractor has performed poorly in one city or town, they may relocate to avoid a negative reputation.

Ask for referrals. “Do they freely offer references? Do they offer references before you even ask? Pay attention to their level of openness,” says Wallender. Keep in mind that no one is going to give you an unfavorable referral. The best way to circumvent any bias is to ask, “What are two things that you did not like about this contractor’s work or your dealings with him? Did the team stay on schedule?” Even if you receive nothing but positive feedback, you should still contact the Better Business Bureau (www.bbb.org) or Ripoff Report (www.ripoffreport.com) to see if the company has had any problems, advises Wallender.

Confirm credentials. Various organizations can help you determine the validity of a contractor’s credentials. Your state’s licensing board can tell you whether or not a company has a legitimate license. Another option is to check online at the Contractor’s License Reference Site (www.contractors-license.org), suggests Wallender. This site allows you to look up contractors across the nation. Your state consumer protection agency is another reliable source.

Also verify whether or not a contractor has insurance. The company should have liability insurance, which covers damages to you and your home. It also extends to vehicle coverage. Workers’ compensation provides medical coverage in case a contractor’s employee is injured at your home. In addition, make sure the company has a surety bond, which may be a condition of licensing.

Evaluate skill level. While it’s important to ensure that contractors are licensed, understand that “a license does not guarantee quality, it just means they fulfilled some minimum requirements set down by some municipality,” adds Wallender. It’s important to inquire about additional certifications.

Have open, two-way communication. Don’t just ask questions; be prepared to give information. Clearly explain your goals and expectations. Identify the services that you’re looking for and ask if they have previously completed projects similar to what you want. You may find that you need to hire someone who specializes in the area of renovation that you’re seeking. Also ask if they have a portfolio that you can review and if you can visit homes that they have remodeled. “Remodeling is a service, not a product, and you have to be able to get along with the people providing that service,” says Greg Miedema, president of Dakota Builders Inc., a home design and remodeling company in Tucson, Arizona. Ask when they are available and how long the project will take to complete. “Some contractors have a very long lead time,” says Wallender. “Some may not be able to get to you for a year or more than that, particularly if all they do is big jobs like additions.”

Get it in writing. “Create a written contract,” says Plemmons. “It should include the start date and the completion date, ‘the scope of work,’ the payment amount, and work schedule, as well as penalties for delays.” The scope of work provides details about the work that will be performed as well as the materials needed to complete the project.

Pay attention to red flags. Be aware of the signs that may indicate incompetence. The biggest indicator is the request for a large sum of money up front. Standard procedure is for a contractor to ask for one-third of the estimate in advance. If you’re asked to pay half of the bill or more initially, it is likely that the contractor is illegitimate. Another major signal is a contractor without a license or insurance.

This article originally appeared in the October 2009 issue of Black Enterprise magazine.