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Beware of Value-Killing Home Renovations

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Among the least cost-returning projects are a sunroom addition and home office remodeling, both estimated to recoup less than 46% of what they cost.

Where you live can affect the return on these renovation investments, and the value of specific projects can vary region by region.

The Pacific region (Alaska, Hawaii, California, Oregon and Washington) has the highest average cost-value ratio in the country, at 71.3%, "largely because the high cost of remodeling in the region is more than offset by high values at resale," according to the report. Mid-Atlantic states averaged a return of 56.8% and East North Central states (Illinois, Indiana, Michigan, Ohio, and Wisconsin) recouped an average of 55.3%. West North Central states (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) saw the least amount of return, with 49.5%.

While fireplaces have traditionally been in demand, even they may be slipping in popularity. In 2009, a consumer preference survey from the National Association of Home Builders ranked fireplaces as No. 1 on a list of what NAR called Home Fads That Are Falling Out of Style. Also sliding from favor are carpeted floors and vinyl and ceramic flooring (hardwood has become more desirable) and "upscale kitchen finishes" as granite countertops gradually give way to low-maintenance, more durable laminate countertops.

DeSimone cautions homeowners against relying on add-ons and renovations to improve the value of their property when more fundamental concerns should be a focus.

"First and foremost, a seller should make sure their home is well-maintained and that it looks well-maintained," he says. "Before a seller starts making improvements like adding new energy-efficient windows -- which are nice to have, but not something a buyer would truly care that much about -- I recommend they make sure the structural integrity of the house is sound. For example, if there is dry rot on the back deck or some issue with the roof or the foundation, these things need to be addressed, otherwise knowing that type of flaw exists will scare buyers off. It is not uncommon that a seller would have to spend $15,000 on dry rot just so that they can say the property is well-maintained."

"It's hard to put a value on this type of improvement since the sellers aren't really getting their money back," he adds. "But ultimately the value we're talking about with this type of improvement is getting a buyer to write an offer on your place sooner than later and not having your home on the market for months and having a series of price reductions, which end up killing the value."

-- Written by Joe Mont in Boston.

>To contact the writer of this article, click here: Joe Mont.

>To follow the writer on Twitter, go to http://twitter.com/josephmont.

>To submit a news tip, email: tips@thestreet.com.

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