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Homeowner’s dilemma: fix up or move on?

Suppose your house is outdated or hopelessly overcrowded. Is it best to stay and renovate or to pull up stakes and move on?

According to results of the fifth annual American Express Retail Index on home improvement posted on the company’s Web site, Americans plan to invest more money to fix up their homes this year. Home improvement budgets outpaced the nation’s economy, rising to an average of $2,888, a 5 percent gain over 1999.

“In many parts of the country, the tight housing market makes it difficult for consumers to purchase a new home. Therefore, home improvement takes on an even greater priority,” said Valerie Soranno, vice president and general manager, American Express.

Making your own decision
There isn’t one right answer for everyone, but here are some factors to weigh:

The neighborhood in which you live. One real estate principle holds that too much improvement can work against you, and that less expensive homes surrounding yours will bring your value down. On the other hand, if your level of satisfaction with the neighborhood and the surrounding area is great and you plan to stay in your home for a long time if it can be upgraded, you may be able to enjoy the improvements whether or not they bring any additional value to the property when you sell.

The functionality of your remodeling project. If, for example, converting a family room into a bedroom results in an unconventional floor plan, that would adversely affect your home’s value.

And, unless you update the entire house to match an addition, the newer section can draw unfavorable attention to the outdated section.

Home renovations that usually pay off. Some renovations are more likely to be recouped when your home is sold. At the top of the list is a minor kitchen remodel where you could potentially get back more than 150 percent of your investment. Others are bathroom additions and remodels.

When it’s time to move on
If you decide to buy another home, here are some ways to make your house more marketable and get a favorable price for it.

1. Make your home appealing from the curb for a good first impression.
2. Give the interior and exterior a fresh coat of paint to impart newness and freshness.
3. Make all minor repairs to things like leaky faucets, loose knobs and broken doors.
4. Remove excess furniture and stored items to make the home appear more spacious.
5. Open curtains and blinds or turn on lights to brighten up dark spaces.

Your home is one of the largest investments you’ll make. Consult with a real estate professional and a financial advisor to reach the goals you set for yourself.

March 30, 2000

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