As homeowners consider where to spend money on their homes in 2010, the latest Remodeling Cost vs. Value Report reveals that the most cost-effective home improvement projects are small in scale. Seven of the top ten projects that will recoup the most money for homeowners are improvements to the exterior of a home that cost under $15,000.
Homeowners who plan to stay in their homes for a long period of time clearly have different priorities than those who intend to sell. Both types of homeowners can benefit from the information in the 2009 Remodeling Cost vs. Value Report, produced annually by Hanley Wood, LLC, Remodeling magazine and Realtor magazine. The report shows that over the past four years, homeowners have been emphasizing essential, low-cost projects.

Angie Hicks, founder of Angie's List, a provider of consumer reviews for local businesses, says that a recent member poll showed that the average homeowner spent about $9,200 on home improvement projects in 2009.

"If homeowners plan to stay in their house for a long period of time, they will generally tackle bigger projects that incorporate more of their personal taste – adding a media center or exercise room, outdoor kitchen, or totally updating a bathroom or kitchen," says Hicks. "Homeowners planning to sell their home in the near future opt for basic improvements that will make their home look better – freshening paint and fixing things like drippy faucets, dings in walls, loose light fixtures – more superficial things that might catch a prospective buyer's eye."

Sellers: Improve to sell
Donna Evers, broker and owner of Evers & Co. Real Estate in Washington, D.C., says that exterior improvements should be the first place sellers spend their money.

"Everyone buys a home based on an emotional reaction, so the first impression matters the most," says Evers. "If something turns people off, such as overgrown bushes or peeling paint, they may not even come inside."

Evers says the second place to spend money to improve a home's marketability is in the first room visitors see inside. After that, the key decisive element in every home is the kitchen.

"Before homeowners spend any money, they should get professional advice," says Evers. "Realtors are objective and can tell you what you should and shouldn't do to maximize your resale value."

Best investments
Among the projects that return more than 75 percent of their cost are a wood deck addition, siding replacement, window replacements, a basement remodel and a minor kitchen remodel (costing approximately $21,000). Installing a steel front door brings a return of more than 128 percent. An interior project that increased in value over previous years is an attic bedroom addition, which Evers says makes sense because you can capture additional living space without the expense of an addition.

The projects that returned the least value for their investment in 2009 were home office remodels and sunroom additions.

Hicks says that 80 percent of the contractors they surveyed are dropping prices, which can improve the cost vs. value equation.

Hicks suggests, "Shop around and don't be afraid to ask for a better price. However, avoid any door-to-door solicitors and don't allow yourself to be dazzled by bargain- basement prices. Always get at least three estimates in writing and check your contractor's license. Read the contract and NEVER sign a contract with blank spaces."

Source Inman