Lucky you–you've got a little time to wait for the lousy housing market to get better. Make the most of that time by doing incremental improvements along the way. "It's a win-win if you have a to-do list and you get ahead of the game," says Pat McGowan of Baird & Warner. "You'll feel better about your home while you're living there, and you can show buyers receipts: 'Look, this is what we've done.'"
Deal with the mechanicals and roof. "Your ten-year-old water heater: How old will it be when you're ready to sell?" queries Rubenstein. Ask the same question about your furnace and air conditioning. Budgeting to replace these items in the next few years is smarter than waiting until sale time, when moving and other expenses loom. Expect to pay about $1,000 for a gas furnace, $750 for a water heater, and $1,400 for central air.
Bob Floss emphasizes that maintaining the roof is essential too. "If your house needs a new roof and you let it go so long that it needs a tear-off instead of a new layer, the cost will be double or even triple," he says. Paying the lower cost–about $4,000 for a new layer as opposed to about $12,000 for a new roof–precludes having to pay the higher cost at or just ahead of sale time.
Rehab value analysis
What's the payback on certain rehabs in metro Chicago? Here's the data on five midrange upgrades in order of cost percentage recouped; get additional info at costvsvalue.com.
|Job||Cost||Added value||Cost recouped|
|Minor kitchen remodel||$22,100||$14,100||64%|
|Attic bedroom remodel||$69,500||$44,000||63%|
|Deck addition (wood)||$12,900||$7,600||59%|
And remember to trim any tree branches that hang over your house. "Too much shade on your roof shortens its life by five to seven years," Floss says. "Moss grows underneath shingles and can cause them to rot and develop black mold."
Create more living space in your attic, basement, or backyard. "Renovating a basement or attic is cheaper than an addition, so it adds greater value to the real estate that you've already bought," Rubenstein says. Those changes aren't exactly inexpensive–a midrange upgrade to the attic or basement can easily cost more than $50,000. But you will be able to enjoy the improvements while you live in your home, and, according to Remodeling, you can likely recoup more than 50 percent of your investment when it comes time to sell .
Before you begin, consider the norm for your area. For example, "in the western suburbs," Floss observes, "there's not a good return for a finished basement" because the first-floor family room is standard there. "In Chicago, the basement will have a return. Finish it as additional living space, not as a lounge."
Save the lounge act for the backyard. Grills, outdoor kitchens, built-in seating, shade covers–"people want to see all the toys out there," Floss says. Installing a new deck can be expensive–$12,000 and up–but you're likely to see a good return on your investment. Otherwise, focus on low-maintenance items. To buyers, a waterfall, a pond, or a hot tub looks like a maintenance bill waiting to happen.
Splurge a little on your kitchen and bathrooms. The home appraiser Ian Bayne notes that, except with homes that cost more than $1 million, "the difference between a $5,000 fridge and a $1,500 fridge is zero in the valuation." And at higher price points, buyers will mostly want to make their own style choices anyway. "In a bathroom, there are about 30 elements that are personal choices," Rubenstein says. Buyers who walk through and don't like at least two-thirds of them "will think, Somebody spent money on this, and I will now have to spend money on it too."
Midrange improvements are best. At sale time, they will show buyers that the home is up to snuff without disproportionately affecting your asking price. That's the plan Marissa and George Dakis are following. When the market picks up, they would like to move to a big house, but until then they are making select upgrades to their two-bedroom condo in Lincoln Park. Among other things, they have already fixed up two of their bathrooms, and Marissa has her eye on the third. She wants to put a large bathtub in there, something she can enjoy that would also be a lure for any future buyer.
Even simple bathroom upgrades can be a plus. New shower doors and pedestal sinks in place of outdated vanities all add value. Floss advocates springing for new flooring in a bath but not in the kitchen: "It's a small area to do, so it's not a big ticket to get some impact."
Bayne does sound one cautionary note. He predicts that neighborhoods and towns that benefited during the boom years from being adjacent to already-popular places–he calls them "expansion areas" and cites Humboldt Park and the South Loop as examples–may be slower to rebound than their neighbors. And as the Zeitgeist shifts, they may not regain their status as hot locales. So be careful not to overimprove a home in those areas. "See what the comparables look like," he says, by visiting nearby open houses. "Get your home to that level, but not above it. You don't want to have to wait until the market catches up with you."
Now is a good time to anticipate anything that could give buyers the jitters. Rubenstein suggests that if you can't find those flaws yourself, pay for a home inspector to walk through as if representing a buyer. "Anything the inspector doesn't like goes on your list," he says. Plan to spend between $300 and $400 to have a three-bedroom house inspected.