Maryland homeowners are undertaking renovations and remodels for several reasons in today’s real estate market. Many owners who purchased in the last 5 to 7 years have been forced to stay in their homes because they owe more than the present market value. They realize that since they will be staying in their home for a while, they might as well make improvements that they will enjoy. Others, who are considering a move, are improving their homes to make them more market ready when they decide to sell. Upgrading a home to the standard of the neighborhood is usually a wise choice for a value-conscious homeowner.
Return On Investment
Whatever the reason, making careful and thoughtful decisions about home improvement is the key to getting the most return on investment. Most improvements that are made do not bring the full return of the cost at the sale of the home, but some improvements bring a better return than others.
In conjunction with National Association of Realtors, Remodeling Magazine conducts an annual survey that is one of the most comprehensive and most cited on the subject of return on investment when it comes to home remodeling. The 2010 survey has just been published at .
The average payback on home improvement projects in the Washington Metropolitan Area, which includes a large part of Maryland, is 64%, with a low of 48% on a home office remodel, and a high of 147% on a steel entry door replacement.
The 5 top ROI projects are:
An attic bedroom at 90% ROI
A basement remodel at 84% ROI
Siding Replacement at 80.5% ROI
A wood deck addition at 79.8% (A composite deck has a 71.2% ROI)
Window Replacement (wood) at 78.4% ROI (Vinyl widows bring 76.4% ROI)
What gets the least ROI?
Office Remodel at 48% ROI
Sunroom Addition at 55% ROI
Backup power generator at 60% ROI
Bathroom addition at 62% ROI
Garage addition at 66% ROI
Renovations on Older Homes: Lead Paint
The median age of homes in the U.S. is 36 years old. In other words, half the homes in the country were built before 1974. The median home age in Maryland is 42, half of the homes in Maryland’s communities were built before 1968. Lead paint was not banned until 1978. Many of these older homes contain lead paint, which is a health hazard and requires special treatment. New environmental regulations took effect this year, requiring a contractor to have a certification by the EPA to perform work on homes with lead-based paint. The enforcement of the rule won’t start until October 1 of 2010, to give remodeling contractors time to get the certification.
The rule doesn’t apply to do-it-yourself homeowners, only to professionals. But homeowners who undertake renovations should become familiar with issues surrounding lead-based paint. The EPA publishes guidelines in “Renovate Right”, found on their website.
To find out if your home has lead based paint you can use a test kit found at your local hardware store. You can also hire a certified risk assessor or contractor to find out.
Greening Your Home
Once the testing is out of the way, the possibilities for renovation plans can be endless. Green renovations are just one of the considerations to think about. Green construction is getting much more positive press these days, from builders and from buyers. Green renovations could make your house more desirable to buyers in today’s market. In a recent survey by U.S. Green Building Council (USGBC) and McGraw-Hill Construction, the results show that interest in green-friendly renovations and building strategies are on the rise. Some of the findings:
Green building combines smart design and careful material selection to reduce energy and water consumption. One of the many resources for green design ideas is the U.S. Green Building Council. When planning green renovations, remember the Federal tax Credits for certain qualifying energy efficient renovations, but also remember that Maryland’s tax credits and grants for certain home renovations.
If the renovations you are planning are beyond your scope, hiring a reputable contractor is a wise choice. The cost is often well-spent when the results are professional. But how does one select a contractor who will do a great job for a reasonable price?
Tips from the Better Business Bureau
While the cost vs. payback factor is important in planning renovation projects, it’s not the only consideration. For homeowners who are renovating to be able to “age in place” or who need to care for an elderly family member, or remodel for a home office so they don’t have to commute, other issues may be more important than return on investment. For some projects, the satisfaction and quality of life while living in a house that you love is the main priority.
Gather bids from between 3 to 5 contractors.
Ask for specific information about work to be performed, materials to be used and start and completion dates.
Ask to see the contractor’s license and certificate of insurance.
Request references. Ask if the customer was satisfied and if the project was on-time and on-budget.
When you choose a contractor, don’t pay too much, too fast. You can expect to pay as much as 20% of the project cost to get started, then periodically throughout the project. Reserve the last 10% until the job is completed to your satisfaction.
Choosing the contractor is the most important step when planning a remodeling project. As with most cases, seeking a recommendation from other professionals is good advice. Family and friends are a good source as well. An architect would have a list of referral.
There are several websites that offer reviews and advice about local contractors. The National Association of the Remodeling Industry, The Better Business Bureau, provides consumer ratings.Should you choose the lowest bidder? Remember the old adage, “You get what you pay for.”It may be worth paying more to make sure the job is done to your vision and satisfaction.
Remember to prepare for contingencies, additional items that may not have been foreseen. With a large job, these unanticipated issues are inevitable. They should be included as a separate line item on the bill. With older homes, they can add up to as much as 20% more.
If you are planning a large project, you’ll want to become familiar with the latest building practices. The NAHB has published Residential Construction Performance Guidelines, they have a consumer version on their website, .
If a home renovation is on the agenda for your Maryland home, you may just end up with the home of your dreams after all.