Remodeling Your Home

Quite often, it is necessary or desirable to remodel your home. This article provides an overview of some of the economic and stylistic issues that you should consider when undertaking this endeavor.

Before You Start

• Consider whether the renovations you have in mind will justify the cost.
• Ask for advice from people who have recently remodeled their homes.
• Be realistic about your ability to do home improvements on your own. If you're not qualified, you could make expensive mistakes.
• Review your budget and financing options to determine how you'll pay for the work.

Remodeling Your Home

Renovating an existing home can be a significant undertaking. There are budget issues to resolve, permits to obtain, contractors to interview, and legal factors to consider. This article provides an overview of issues you may want to consider when updating the look or structure of your home.

Budgeting Basics

Establishing a budget is an important first step for many homeowners. Costs vary widely, depending on whether you pursue a standard renovation project with materials purchased from a national chain store vs. a high-end remodel with elements designed to your specifications. For example, REMODELING Online has estimated that the cost of a kitchen renovation can range from $17,928 to more than $54,241, depending on the scope of the work done. An upscale makeover with elements custom-designed for a homeowner may cost significantly more.

REMODELING Online's 2006 Cost vs. Value Report presented the following national averages for mid-range renovations frequently undertaken by homeowners:

• Vinyl siding replacement: $9,134
• Vinyl window replacement: $10,160
• Bathroom remodel: $12,918
• Roof replacement: $14,276
• Deck addition: $14,728
• Bathroom addition: $28,918
• Basement remodel: $56,724

Keep in mind these numbers are averages, which means you may be able to spend less. If you are just beginning to think about a renovation project, visit several home improvement stores to get prices for the types of materials that appeal to you. Ask representatives to help you develop a list of items you are likely to need for a given project. Larger stores may employ personnel who can develop rough drawings of kitchens or other rooms to help you determine your options for placement of appliances, lighting and other issues.

Bang for Your Buck

Many homeowners want to select renovation projects that are likely to yield the highest return on their investment when they ultimately sell their home. The following renovations are those most likely to result in a payback for homeowners:

	Average Cost	Return on Investment
Vinyl Siding Replacement	$9,134	87.2%
Minor Kitchen Remodel	$17,928	85.2%
Window Replacement (Wood / Vinyl)	$11,040 / $10,160	85.3% / 83.7%
Bathroom Remodel	$12,918	84.9%
Two-Story Addition	$105,297	83.2%
Attic Bedroom Remodel	$44,073	79.9%

Although return on investment is important, also consider your lifestyle. If your family is growing, an extra bathroom or bedroom may be your most immediate need, even if a kitchen remodel would result in a higher return on investment. In contrast, empty nesters may be more inclined to take on renovations that reduce ongoing maintenance, such as vinyl siding, instead of adding space to their home.

Planning for Permits

In most instances, a building permit is required when the living area of a home is changed or when structural work is undertaken. For instance, transforming an unfinished attic into a master bedroom suite typically requires a permit. The types of permits mandated by different jurisdictions vary considerably. If you are undertaking a project that encompasses structural, plumbing and electrical work -- such as a new bathroom or kitchen -- you may need separate building, plumbing and electrical permits.
The National Association of the Remodeling Industry (NARI) recommends that homeowners not take out their own permits but instead leave this task to their contractor, who typically is familiar with the permitting process in a given locale. Typically, the individual who obtains a permit is considered to be the contractor and is legally responsible if work does not adhere to local building codes. Requiring your contractor to obtain permits protects you legally and is part of the job you are paying a contractor to do. Because it can take weeks or months to obtain permits, be sure to leave time in your schedule for the permitting process.

A Written Contract

A contract defines the scope of a job and provides a degree of legal protection for both the contractor and the homeowner. Although contracts vary in length, they frequently include the following provisions:

• Details about what the contractor will and will not do
• A list of materials specifying size, color, model and other particulars
• Approximate start and completion dates
• Design plans that you approve before work begins
• Right of Recision, a federal law that requires a contractor to inform a homeowner of the right to cancel a contract without penalty within three days of signing it
• Financial terms, including total price, payment schedule and cancellation penalty
• Warranty covering materials and workmanship for a minimum of one year

You may want to ask your attorney to review the contract before you sign it.
Paying attention to your budget, potential return on investment, permits and a written contract may help ensure that your renovation project is a success. Even if problems do emerge, you will have a framework for dealing with them and potentially moving on to a satisfactory completion.

Summary

• Remodeling demand is driving new product technology and costs.
• Kitchen remodeling ranks first in popularity and resale value.
• Retain a reputable contractor through references and estimates.
• Do not proceed without a written contract.
• Project financing is available through home equity loans, mortgage refinancing, and home improvement loans from banks, credit unions, and insurance and finance companies.