paying for improvements will it return ?

Asked by To Sell Or Not To Sell, Shelton, CT Fri Jun 15, 2007

Hello, I have a 4 bedroom 1.5 bath colonial in shelton and am debating whether or not to finish the attic with another bathroom and possible kitchenette, new windows etc. Do you think the market will reflect the money I invest now to improve the home?

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Rk Ruthman, , Connecticut
Thu Jun 21, 2007
In today's market, these are things to consider:

1) What is the overall condition of the property? Could less money be well-spent for a more respectable return?

2) Location? Shelton is a beautiful area!
Research your neighborhood and local market for comparables recently sold.

Check *history of comparables.
What was the original price?
Were there seller's concessions? (This may be a tough piece of information to get)

*History information is available to Realtors.

3)Check out comparable houses on the market. Go to opens. Research their activity history. Learn how many days homes are on the market? Were they relisted?

5) Get estimates from reputable contractors. Minimum of three. Check references.

6) Permits and Law. Go to townhall. Your contractor may get all the required permits, but if you educate yourself there will be no surprises or slowdowns when you sell. If you are thinking of adding a kitchenette to an attic there may be safety requirements.

Heating? Can your existing furnace do the job? If you add "electric baseboard" what will that do to utilities. Buyers want to see utility bills. How about air-conditioning? Attics can get a little warm in summer.

Do you have a mortgage to satisfy? How much?

Will you be using a real estate service to sell? Commisions are negotiable and vary. But you will not find traditonal full service lower than 3% of the sale price. (This is a personal opinion based only on reading companies that advertise their commision in Fairfield County)

Do all the math. Bottomline?

New windows: Great *Sellability.

New bath: Great *Sellability.

*Sellability: Buyers may pay more attention and make a desirable purchase offer over another comparable house for sale that might not have the same amenities.

In this particular market, this is what buyers have told me they are looking for: (energy efficient) mechanics (furnace, c/a, waterheater). Alternative (green) energy resources that are good for the environment and pocketbook. New appliances. Newer roofs. Sparkling hardwoods. Nice/Low maintenance landscaping. Organized storage.

Pay attention to interest rates, they have an impact on Buyers being able to purchase. If you receive an offer, give it careful consideration. The market is saturated with properties. Do not lose your buyer.

There are so many variables of achieving your goal. It is do-able, but in this particular market it must be done wisely.
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Robert Rees…, , Texas
Sat Jun 16, 2007
Essentially what you are saying is that you are going to be adding "finished" square footage to the home. So to find your answer, you need to determine FIRST, what the total sqft of the home will be when completed and if that total is not Normal for the neighborhood, then it's probably not a good idea. Assuming that there are homes within that sqft, then you just need to know the avg. Price / Sqft of homes in the area, then determine what the Construction Cost / Sqft will be to finish it out. For example, if the new finish out is going to add 500 sqft to the house and if the Construction Costs / sqft is $100/sqft, and the neighborhood sells for $200 / sqft, then you should theoretically profit $100/sqft on the construction.
Same example using Total Numbers would be:
House is 2000 sqft then adding 500 sqft would equal 2500 sqft.
Prior to the addition you'd be able to sell your home for $400,000.
The addition (at $100/sqft) costs $50,000, but now the 2500 sqft house should sell for $500,000.
$100,000 higher minus the construction costs = $50,000.

These numbers are just thrown out there. Rarely is there that much disparity, in fact many times it isn't feasible to do the finish out just because of the TIME it takes and therefore interest lost.
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