Will making repairs boost home’s value?
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By Scott Sheldon  June 14, 2013 12:00 am

Home equity has come roaring back. Many can now refinance, and others are in a better position to sell as the intense demand for real estate continues. 

Everyone wants to attain maximum value for their homes. So what’s the best indicator of a home’s worth? Simple: the amount a ready, willing and able buyer is willing to pay for the property at any given point in time. Unfortunately, appraisal figures can be skewed, especially when some home improvements are not considered in the value estimate.

Home value is most important when refinancing or selling a home.

When refinancing, the weight of an appraisal is based upon the facts (including other homes that have sold) and the legal description of the property i.e. bedrooms, bathrooms, square footage, etc.


Improvements that may help a refinance valuation:

• Additional bedroom or bathroom.


• Addition to the lot size.


• Addition to the garage.


• Improvement that expands use of the home.


Improvements such as landscaping, painting, any home improvement more “cosmetic” in nature- main benefit would be for enjoyment of the home, not trying to influence a valuation.

When selling, a home buyer is going to take into consideration all of the facts associated with the property – location, lot size, square footage, bedrooms and bathrooms, as well as additional cosmetic improvements that have been done adding to the look and feel of the home, in other words, curb appeal.


Improvements that 

may help a sales price:

• New paint job


• Freshly maintained landscaping


• Remodeled and/or upgraded interior


• Deck and/or patio addition


• Additional bedroom or bathroom


• Addition to the lot size


• Addition to the garage.

Improvements that 

maximize dollars

Any high-ticket items that increase the home’s square footage. An additional bedroom or an additional bathroom for example increases the square footage, which in turn gives an appraiser more flexibility to make higher adjustments when determining valuation against the raw data (other sold houses in the area).


Let’s say you have available funds for improving your home or improving your mortgage position. In most cases, possibly redirecting those funds for use in the loan transaction could benefit you in the longer term picture of holding that mortgage in keeping the property rather than doing an improvement when the savings generated by refinancing could be used to finance the home improvement anyway, not to mention the additional reduction in interest expense over time.

Selling in the nearer future

Typically, it’s not a dollar for dollar recapture on the home improvement costs even when selling. Because the weight is given to improvements surrounding the facts (i.e. bedroom, bathrooms, etc.), it’s more common to expect approximately 30 cents on the dollar. 

You may get higher cents on the dollar as a return on investment, but that is driven heavily by the market. Because the market is the strongest indicator of price, market will dictate sales price followed by additional home improvements and marketing of the home.

Scott Sheldon is a local mortgage lender, with over six years of experience helping people purchase and refinance primary residences, second homes and investment properties. Visit him at www.sonomacountymortgages.com.

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