Most markets across the country are still seeing home prices inch up, although at a slower pace than in previous quarters. The national median single-family home price in the fourth quarter of 2018 was $257,600, up 4 percent from a year ago, the National Association of REALTORS® reported Tuesday.
Here’s how existing-home sales fared across the country in the fourth quarter of 2018:
Northeast: Existing-home sales were at an annual rate of 707,000, down 5.4 percent from a year ago. Median single-family home price: $286,000 in the fourth quarter, up 6.5 percent from a year ago.
Midwest: Existing-home sales fell 0.3 percent in the fourth quarter and are 5.9 percent below a year ago. Median single-family home price: $196,900, a 1.6 percent increase from the fourth quarter of 2017.
South: Existing-home sales dropped 2 percent in the fourth quarter and are 5.4 percent lower than the fourth quarter of 2017. Median single-family home price: $228,200 in the fourth quarter, 3.3 percent above a year ago.
West: Existing-home sales fell by 6.5 percent and are 13.9 percent below a year ago. Median single-family home price: $383,100, up 1.8 percent year over year.
Ninety-two percent of the 178 metro markets measured saw an increase in single-family home prices. Fourteen metro areas saw double-digit increases, down from 18 in the third quarter.
“Home prices continued to rise in the vast majority of markets, but with inventory steadily increasing, home prices are, on average, rising at a slower and healthier pace,” says Lawrence Yun, NAR’s chief economist.
Existing-home sales—which include single-family homes and condos—fell to a seasonally adjusted annual rate of 5.18 million in the fourth quarter, down 7.4 percent from a year ago, NAR reports. Nationwide, 1.55 million existing homes were available for sale, 6.2 percent more than a year ago.
Many West Coast markets, however, remain starved for inventory, Yun says. “The West region, where home prices have nearly doubled in six years, is undergoing the biggest shift with the slowest price gain and large buyer pullback,” Yun says.
Housing affordability across the country will be the key to sustained healthy growth in the housing market, Yun notes.
“That requires more homebuilding of moderately priced homes,” Yun says. Housing starts have fallen short of historically normal levels. About 9.6 million new housing units have been added in the past decade—compared to the projected 15 million to 16 million that are needed to meet population growth and 20 million new job additions.
“Local zoning law changes, expanding construction worker training programs at trade schools and promoting the use of tax breaks for developers in the designated opportunity zones will all play an important role in assuring an adequate future supply of housing,” Yun says.
Most Expensive Markets
The most expensive housing markets in the fourth quarter were:
San Jose-Sunnyvale-Santa Clara, Calif.: $1,250,000 (median existing single-family home price)
San Francisco-Oakland-Hayward, Calif.: $952,400
Urban Honolulu: $812,900
Anaheim-Santa Ana-Irvine, Calif.: $799,000
San Diego-Carlsbad: $626,000.
Most Affordable Markets
The five lowest-cost metro areas in the fourth quarter were:
Decatur, Ill.: $89,300 (median existing single-family home price)
Barbara Corcoran: This is when and how to buy your first home
Self-made millionaire and star of ABC’s “Shark Tank” Barbara Corcoran wants you to buy a home ASAP if that’s something you can do.
While she doesn’t specify an age, in general, “the faster you buy your first home, in my opinion, the better,” she says. “You’ve got to get in the game.”
Corcoran, who made her fortune in real estate, has regrets about how and when she got started. “When I bought my first studio in New York City, I got cold feet and didn’t close and relinquished a 10 percent deposit which took me three years to save,” she says. “And you want to know what happened? I couldn’t get back into the market for almost eight years.”
That meant that “by the time I had the money for a one-bedroom, it only bought a studio, and it just went on and on and on and left me behind,” she continues. “What I learned from that experience is: The minute you can afford something, plunk the money down and get in there.”
If you’re excited and in good shape to buy, Corcoran says these are the five steps to take.
1. Check your credit score
Before trying to buy a home, you want to know where you’re at financially, which means checking your credit score.
“The loan you get to buy the property will be totally dependent on your credit rating,” says Corcoran. Generally speaking, the higher your credit score, the lower the interest rate on your mortgage, and a lower interest rate can mean significantly lower monthly payments. In other words, a high credit score means you’ll spend a lot less on your home in the long run.
If your score isn’t great, consider taking some time to improve it before home shopping, she says.
The 4 biggest mistakes first-time homebuyers make
2. Figure out what you can afford
Corcoran offers a simple formula to help you determine how much you should spend on your first home: “Multiply your salary times four and that’s generally what you can qualify for.”
While this formula assumes you’ll be able to make a 20 percent down payment, “if you haven’t been able to muster 20 percent together, you shouldn’t lose heart,” Corcoran says. Some experts, like Bach, say a down payment of at least 10 percent is OK, though more is always better.
Another simple rule of thumb to follow, says Corcoran and other experts, is to aim to spend about 30 percent of your take home pay on housing costs. Keep in mind that this 30 percent encompasses more than just the sticker price of the home: It should include all related costs, like mortgage interest, taxes, insurance, maintenance and any renovations you might want to make.
Here’s exactly how much house you can afford on your salary, according to Barbara Corcoran
Why 30 percent? It’s a standard that the government has been using since 1981: Those who spend more than 30 percent of their income on housing have historically been said to be “cost burdened.” Those who spend 50 percent or more are considered “severely cost burdened.”
As a first-time homebuyer, be prepared to start small, Corcoran adds: “If you’re thinking about buying your first one-bedroom, change your thinking: Buy your first studio instead. If you can’t afford a good studio, buy a little studio. The reason being is you want to trade up.
“Every single person who is living in a multimillion-dollar home started with something smaller that they didn’t find acceptable. Lower your standards. Get something small so you have a chit in the game, and you can trade up the studio to a one-bedroom, two-bedroom, four-bedroom house.”
3. Budget for closing costs
“The biggest mistake that first time homeowners make is they forget that they need closing costs — not just the down payment of say 10 or 20 percent,” says Corcoran.
Closing costs vary depending on where you live and the type of loan you choose, but you can expect them to tack an additional 2-5 percent of the total cost of the home onto the final price. That means, if you’re buying something for $200,000, you’ll owe anywhere between $4,000 and $10,000 in fees.
The types of fees you can expect at closing include recurring costs like property taxes, homeowners insurance, prepaid loan interest and title insurance, plus nonrecurring costs like an inspection fee, application fee, appraisal fee or credit report fee for pulling your credit score.
“Get something small so you have a chit in the game, and you can trade up.”-Barbara Corcoran
4. Shop in the right area
Location is everything. In fact, if you buy in the up-and-coming areas, you won’t just become a homeowner — you could make a fortune, says Corcoran. You’ll get in at a lower price and, if you make a smart bet, you’ll see “tremendous appreciation,” she says.
Corcoran’s strategy for finding the next hot spot is unconventional but effective: “What I’ve always done is I’ve asked my very nice, very young waiters at new, posh restaurants: ‘Hey, where are you living?’ They’ll always cite a neighborhood I’ve never even heard of and then I go out there and shop for real estate.”
After all, “if people are talking about it, it’s already been up and it’s already coming. Too late for that.”
“Before you go out shopping for your first home, the most important thing you have to do is to qualify with a bank for your mortgage in advance,” says Corcoran.
Pre-qualification is an estimate of how much you can borrow from your lender. Ideally, you’ll go one step further and get pre-approval, which analyzes your creditworthiness and assures the seller that you can see the deal through.
If you’re pre-approved, “you’re going to be able to walk in and say, ‘My bid is an all-cash bid,'” Corocran says. “What all-cash really means is, your bid’s not contingent on you getting financing from a bank — you’ve already cleared that with the bank, so you’ve got all-cash to close on the property.”
“Realize that the buyer walks in and judges that house within 30 seconds,” she says. So focus on the areas that prospective buyers will see immediately.
The first thing a buyer is going to see isn’t even inside the house: It’s the exterior, including features like your front door, mailbox, lawn and driveway.
To ensure that your home makes a great first impression, “you want to spruce up the front entrance to your house, repaint the door, make sure the bushes look good, make sure the garden looks in order and power-wash the sidewalk and the driveway,” says Corcoran.
Real estate mogul: Why your home’s finishes, and even a $16,500 door, are worth it
Real estate expert Sean Conlon agrees that your home’s street presence, or “curb appeal,” is crucial. “Your lawn should look beautiful,” he tells Make It. “Your shrubs should be nice and colorful and well taken care of. … Your shutters and windows should look nice. When people pull up, they should go, ‘I could picture myself pulling up in the evening and this being my home.'”
Curb appeal is the reason Conlon says it’s even OK to spend five figures on a custom door: “When you are renovating a house, you want to find ways to make it stand out from all the other homes on the market, and what better way than having the most beautiful entrance on the block? Buyers lap that stuff up.”
That said, you don’t want your home to stand out for the wrong reasons, saysSidney Torres, who helps struggling property investors on CNBC’s “The Deed”:“You don’t want to have light pollution, where the house is just so bright and it sticks out from all the other houses,” he tells Make It. Rather, “I want to make sure that the house is lit almost like a candle: A nice amber light.”
Focus on those kinds of details pays off: “Curb appeal is everything when you’re trying to sell a home,” says Torres, “because that’s the first thing [buyers] see to get interested.”
At the end of the day, he says, “you want them to want to come inside the house.”
Home improvements are a great way to make your living situation more comfortable, but certain improvements can also do wonders for your home’s value.
While your home is not exactly an “investment” in every sense of the word, it does have the ability to appreciate (or decline) in value over time.
And, from an investment perspective, making improvements to your house can be a great use of your discretionary income. For example, if you get a $15,000 bonus this year, it’s a better financial decision to make some improvements to your home as opposed to taking the family on an expensive vacation.
However, not all improvements are created equal. Some will add more value per dollar spent to your home than others. Here are four improvements that tend to add a lot of value to your home according to Remodeling’s 2014 “cost vs. value report”, and some that don’t make much financial sense at all.
Replacing old siding If your home’s siding is worn or outdated, replacing it could be a good use of your money. Not only can you expect to recoup more than 78% of your investment, but modern siding will last longer and require less maintenance than older materials.
And the return on investment goes up to a whopping 87% if you spend the extra money on upscale fiber-cement siding. It will give your home a high-end look while providing years of durability.
Minor kitchen remodel
The key word here is “minor.” A minor kitchen remodel costs about $20,000 and consists of projects such as refacing (not replacing) cabinetry, replacing old appliances with energy-efficient models, and adding new but inexpensive countertops, sinks, and faucets.
The difference between a dated kitchen and a mid-range remodeled one is substantial, and homeowners can expect to make back nearly 83% of the project’s cost.
However, luxury kitchens are not quite as financially appealing, with the average upscale major kitchen remodel only returning 63% of the cost.
And another word of caution – the quality of your kitchen should match the rest of the home. If you have a relatively dated 2-bedroom house worth about $125,000, it doesn’t make much sense to sink $50,000 into granite countertops, state-of-the-art cabinetry, and high-end appliances. Your ROI (return on investment) will be awful if you do this.
Adding a wood deck to a house will add 87.4% of the project’s cost to the value of the home. The average 16 by 20 foot wooden deck costs just under $10,000 to build, and for those who are good do-it-yourselfers, you could save more and create a better ROI by doing some of the work yourself (as long as you know what you’re doing).
A new door
While replacing your front door is the lowest-cost project here; it’s also the one most likely to pay for itself.
The average steel entry cost $1,162 and homeowners can expect to recoup nearly 97% of the cost of the project. A new door is simply a very inexpensive way to change the look, feel, and initial impressions of your home.
Things not to do Now, this isn’t to say that you shouldn’t do any of these things. Just know that you’re unlikely to recoup most of your money in increased property value.
For example, converting a room into a home office space has a very low return on investment, as does adding a sunroom. Office spaces are not as widely needed as mobile devices have soared in popularity, and sunrooms aren’t the most energy-efficient rooms and can add a lot to your heating and cooling costs.
A swimming pool is one of the worst improvements (financially) that you can make. A relatively basic in-ground pool costs from $20,000 to $60,000, and upscale models can cost much more, and they won’t add much value to the home. This varies by market, but pools can be thought of as more of a burden than a bonus by many people.
So, how much of a factor should ROI be? The projects mentioned here can add significant value to your home, and make your home stand out more to prospective buyers. All of these improvements mentioned are very desirable and are almost expected by house hunters.
The bottom line here is that while the financial return shouldn’t be the only factor when doing home improvements (hey, if you really want a pool, get a pool), but it should be taken into consideration, especially if you plan on selling the home anytime in the next several years.
Interest rates have risen this last year but this chart gives you a good overall perspective. Rates got up to 18.28% in the early 80’s so our current rates are looking pretty low when you compare to where they have been. (Graph provided by CAR.)
Adding amenities to your home can mean more money in your pocket down the road, but it’s hard to know which ones to choose. Zillow studied 4 million home sales to figure out which are worth it. From USA TODAY
Renovating your home can increase resale value, but some upgrades make more sense than others.
If you’re like most Americans, your home is probably your biggest investment. You want that investment to perform as well as possible, so if you think you may sell your home sometime soon, it makes sense to do as much as you can to boost its value.
Depending on your situation, this can mean doing some home renovations so your house becomes more attractive to potential buyers.
But, while upgrades can boost your home price and help your home sell faster, not all renovations have an equal impact on what your home is worth. To ensure you’re making renovations that will actually pay off, read on to find out some upgrades that give you the most bang for your buck.
1. Improving energy efficiency
While most homeowners think upgrades that improve the look of their home will pay off, improving your home’s efficiency may actually make a bigger difference. In fact, a Remodeling.com survey found homeowners can recoup 116% of the costs of attic insulation. And attic insulation is just one of many upgrades that improve efficiency.
“While renovating the kitchen and updating the bathrooms are both great improvements that can increase property value, making energy efficient upgrades will give you more bang for your buck,” according to Sacha Ferrandi, founder of Source Capital Funding, Inc. a real estate finance company. “As the number of energy efficient homes continues to rise, first time buyers and renters are beginning to favor these upgraded homes over traditional homes due to the potential long-term savings.”
Ferrandi recommends upgrading HVAC, water heaters, and windows — these changes cost less than solar panels and are more likely to provide a positive return on investment when the time comes to sell. When you sell, you can recoup around 73% of the costs of upgrading 10 old windows with new ones, and your energy bills will be lower in the time before your move.
If you make energy efficient upgrades, make sure your realtor markets your home appropriately. You can even consider providing copies of your utility bills to potential buyers so they can see how low ongoing costs will be.
2. Sprucing up your exterior
You only get one chance to make a first impression when a buyer pulls up to your home. That’s why Holden Lewis, home analyst at NerdWallet believes the best bang for your buck comes from projects that enhance curb appeal.
“Real estate agents say that the first impression counts the most,” Lewis said. “And the first impression comes from what the buyer sees when the car pulls up to the curb.”
Making changes to your home’s exterior doesn’t have to cost a fortune. “Curb appeal can be improved by some basic efforts such as power washing the home’s exterior,” advised Rhoda Wheeler a realtor with Hoffman Real Estate Group in the DC Metro area. Alternatively, Allen Johnson, realtor and leader of the AJ Team at Keller Williams Realty, recommends painting the home’s front door. “It cost less than $200 and it’s the first impression as the buyer’s enter the home.”
Improvements to landscaping were also recommended by Wheeler, Johnson, and Lewis. “Think about refreshing mulch, trimming shrubs, and planting seasonal colorful plants. These small investments create value when selling a home,” according to Johnson. In fact, while the statistics vary, most evidence shows you’ll get more than a 100% return on investment for money spent on landscaping.
Making more major upgrades to your home’s exterior can also pay off. Studies have shown you can recoup around 93% of the costs of adding stone veneer, around 91% of the costs of a new garage door, and around 91% of the costs of a new entry door.
3. Budget-friendly kitchen remodels
Roh Habibi, realtor and star of Million Dollar Listing, San Francisco, lists landscaping as the number one remodel that pays off — but the kitchen is second on his list. Habibi describes the kitchen as the “heart of the home,” and recommends focusing on colors and textures when making upgrades. “You don’t need to break the bank for the appliances,” he said.
Most experts agree a kitchen is key to improving a home’s value and Kevin Deselms, a realtor with RE/MAX Alliance in Golden, CO, advised that if a seller has only enough money to renovate one room, the kitchen is the room to pick. “Kitchens are the focal point of almost every home showing and an impressive kitchen will almost always make the difference between an average offer and the maximum,” Deselms said.
Investing in the kitchen makes a lot of sense, as studies have shown as many as 80% of homebuyers list the kitchen as their favorite room. When your kitchen is updated, buyers may also be more forgiving of other outdated areas. “I’ve found that my clients are more likely to tolerate an outdated bathroom than an outdated kitchen,” Maria Tabakova, an agent with Triplemint said.
You don’t have to spend a fortune to make a big improvement in your kitchen, either. In fact, while a major kitchen remodel returns only around 80% on your investment, a minor remodel has an 87% return. A minor face-lift for your kitchen could include painting cabinets or getting new cabinet doors, installing new appliances, upgrading countertops, or switching out cabinet hardware. “There’s just something about new doors and handles and stainless steel appliances that make people excited,” advised Mike Higgins of Keller Williams Realty in Green Bay.
4. Bathroom remodel
If your bathrooms are outdated, this is another room where updates could make a big impact. “Next to kitchens, bathrooms are the number two selling point in most homes,” according to Cedric Stewart, a residential sales consultant and team leader of Entourage RG at Keller Williams in Washington D.C. “Nail this upgrade and you’re halfway to the closing table!”
Studies have shown a minor bathroom remodel can provide a 102% return on investment, and you don’t have to spend a fortune to make big upgrades.
“Consider re-grouting tile; remove and replace caulk around the shower, tub, and toilet areas; and maybe it is time to replace the toilet for a more efficient and modern look,” advised Nancy Wallace-Laabs, a licensed real estate broker and founder of KBN Homes, LLC. “Replacing mirrors and fixtures will also go a long way to improve the look and feel of the bathrooms.”
Higgins also advised changing a plastic tub to a tile shower. “The impression it gives a potential buyer when they’re viewing homes in a similar price point could be huge,” he said. While converting a standard five-foot tub into a tile shower can cost around $4,000 to $5,000, you may get back as much as 84% of the money when you sell your home.
5. A new coat of paint
One of the cheapest updates you can make also has one of the best returns on your investment: painting your home’s interior.
“It cannot be underestimated the effect that a clean coat of new paint has on a property,” said William Fastow, a real estate agent with Sotheby’s International Realty. “Most sellers don’t realize how much abuse walls take ownership until that fresh coat of paint has been applied. New paint lightens rooms, hides visual defects and instantly makes a space feel fresh and clean.”
Painting an interior can produce a 109% return on investment, but could benefit you even more if your home’s colors are unusual. “The colors most people have in their homes are personal, but they should be transitional and appeal to a larger pool of people,” advised Patrick Ryan, a certified residential specialist, senior vice president, and managing broker at Related Realty in Chicago. “Our brokers often suggest Benjamin Moore Gray Owl. It goes with every other color out there — it’s clean and just dark enough to contrast with white borders and make them pop.”
6. Fix your flooring
Flooring makes a huge difference in how your house comes across to buyers and upgrading it can make a big impact.
“The least expensive thing you can do to get your home ready to sell is a nice coat of neutral paint and either new carpet or flooring,” advised Gina Lipari, a real estate agent with Berkshire Hathaway HomeServices in Southern California. “It makes such a difference to buyers, and makes the home look as if it has been maintained nicely. New flooring and paint will instantly brighten up the home, and give it an instant update for very little expense.”
Today, many buyers place a premium on hardwood floors and, when done correctly, hardwood floors could add around 2.5% to a home’s sale price. Installing hardwood can be costly, with popular woods running around $5 to $10 per square foot plus the costs of installation, but you can recoup as much as much as 70% to 80% of the cost when it’s time to sell.
If you’re short on funds, focus on replacing floors in public areas including kitchens and living rooms, while opting for less costly carpet in the bedrooms.
7. Increase your square footage
If you’re up for a bigger investment, making your home bigger — or making more areas of your home livable — could make a huge difference.
“A home’s valuation is strongly driven by the amount of livable square-footage,” said Evan Roberts, a real estate agent and owner of Dependable Homebuyers in Baltimore, MD. “The best bang for your buck upgrades are always those that add to this square footage, like finishing the basement or converting an enclosed deck into a sun room.”
The data is clear that adding space can pay off. You could recoup as much as 83% of your spending on a two-story addition, 81% of spending on adding a bathroom, 74% on a family room addition, and 73% on adding an attic bedroom.
These additions can be really costly, and you’ll tend to benefit the most from adding square footage if you’re bringing your home in line with your neighbors rather than making your home the biggest on the block. If you’re the only two-bedroom in the area, it could be hard to even sell your house without upgrading to a third.
Upgrade your home the right way
Ultimately, the market where you live is going to have the biggest impact on the upgrades you should make. Working with a local realtor can help you to decide what upgrades it makes sense to invest in so your home meets the expectations of buyers in your market.
You’ll also want to make sure upgrades and updates you do in anticipation of selling your home are neutral and designed to appeal to many buyers, as upgrades that buyers don’t like won’t add any value at all.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
It’s a slow Sunday morning. You’ve just brewed your Nespresso and popped open your laptop to check out the latest home listings before you hit the road for a day of open houses.
You’re DIYing this real estate thing, and you think you’re doing pretty well—after all, any info you might need is at your fingertips online, right? That and your own sterling judgment.
Oh, dear home buyer (or seller!)—we know you can do it on your own. But you really, really shouldn’t. This is likely the biggest financial decision of your entire life, and you need a Realtor® if you want to do it right. Here’s why.
1. They have loads of expertise
Want to check the MLS for a 4B/2B with an EIK and a W/D? Real estate has its own language, full of acronyms and semi-arcane jargon, and your Realtor is trained to speak that language fluently.
Plus, buying or selling a home usually requires dozens of forms, reports, disclosures, and other technical documents. Realtors have the expertise to help you prepare a killer deal—while avoiding delays or costly mistakes that can seriously mess you up.
2. They have turbocharged searching power
The Internet is awesome. You can find almost anything—anything! And with online real estate listing sites such as yours truly, you can find up-to-date home listings on your own, any time you want. But guess what? Realtors have access to even more listings. Sometimes properties are available but not actively advertised. A Realtor can help you find those hidden gems.
Plus, a good local Realtor is going to know the search area way better than you ever could. Have your eye on a particular neighborhood, but it’s just out of your price range? Your Realtor is equipped to know the ins and outs of every neighborhood, so she can direct you toward a home in your price range that you may have overlooked.
3. They have bullish negotiating chops
Any time you buy or sell a home, you’re going to encounter negotiations—and as today’s housing market heats up, those negotiations are more likely than ever to get a little heated.
You can expect lots of competition, cutthroat tactics, all-cash offers, and bidding wars. Don’t you want a savvy and professional negotiator on your side to seal the best deal for you?
And it’s not just about how much money you end up spending or netting. A Realtor will help draw up a purchase agreement that allows enough time for inspections, contingencies, and anything else that’s crucial to your particular needs.
4. They’re connected to everyone
Realtors might not know everything, but they make it their mission to know just about everyone who can possibly help in the process of buying or selling a home. Mortgage brokers, real estate attorneys, home inspectors, home stagers, interior designers—the list goes on—and they’re all in your Realtor’s network. Use them.
5. They adhere to a strict code of ethics
Not every real estate agent is a Realtor, who is a licensed real estate salesperson who belongs to the National Association of Realtors®, the largest trade group in the country.
What difference does it make? Realtors are held to a higher ethical standard than licensed agents and must adhere to a Code of Ethics.
6. They’re your sage parent/data analyst/therapist—all rolled into one
The thing about Realtors: They wear a lot of different hats. Sure, they’re salespeople, but they actually do a whole heck of a lot to earn their commission. They’re constantly driving around, checking out listings for you. They spend their own money on marketing your home (if you’re selling). They’re researching comps to make sure you’re getting the best deal.
And, of course, they’re working for you at nearly all hours of the day and night—whether you need more info on a home or just someone to talk to in order to feel at ease with the offer you just put in. This is the biggest financial (and possibly emotional) decision of your life, and guiding you through it isn’t a responsibility Realtors take lightly.
Binge-watching HGTV home improvement shows can make it look so easy—even enjoyable—to do anything from retiling a bathroom to repainting the living room. Heck, it even seems like it might make financial sense to forgo the pricy professionals altogether. What could go wrong?
Those famous last words have led nearly two-thirds of do-it-yourselfers to regret not calling an expert on at least one home improvement project, according to a recent survey from ImproveNet. The online home services marketplace surveyed 2,000 Americans in November who had attempted at least one DIY renovation project.
The average DIY enthusiast attempted eight projects, according to the survey. And about a third of them had to later hire a professional to redo the job—which can cost more than if they’d hired a professional from the start.
“People should educate themselves about what they’re getting into and what the common pitfalls are,” says Andy Kerns, creative director at Digital Third Coast, which teamed up with ImproveNet to do the survey. “It’s natural for people to expect things to go smoothly, especially if they’re not experienced contractors. [But] rather than just jumping in, people should find out what’s happened when things didn’t go well for others.”
Folks with no experience can start with a simple, low-stakes project, and go from there, says Joanne Theunissen, the remodeling chair of the National Association of Home Builders.
“We have seen people take on a lot more than they could deal with,” says Theunissen, also the co-owner of Howling Hammer Builders, a Mount Pleasant, MI–based remodeler and custom builder. “Be cautious. If it looks easy on TV, understand it’s not [in real life].”
Which projects did folks regret doing themselves the most?
If you don’t have experience installing floor tiles, you may want to start slow, rather than in the master bath: That was ranked the most regretted home improvement project by survey participants.
“It’s so difficult, and there are so many steps to getting it right,” says Theunissen. “If you think you want to try, buy an old table and see if you can put ceramic tile on the top, getting it level and grouted correctly. And if doesn’t work, throw it away. You’re not out much.”
The rest of the top 10 most regretted DIY home improvement projects were replacing a ceiling; refinishing hardwood floors; installing carpets; finishing basements; installing hardwood floors; refinishing cabinetry; installing sprinklers; installing showers and baths; and painting home interiors.
Why were these DIY projects so regrettable?
The majority of DIYers, 55%, said their projects took longer to complete than they expected. The ones that ran over more than anticipated the most were repairing home foundations, installing outdoor patios and walkways, and painting the exteriors of their homes.
Meanwhile, about 50% of do-it-yourselfers said their improvements were physically more difficult than anticipated, particularly when it came to installing roofs, landscaping, or installing patios and walkways. And 48% said their endeavors were technically harder than they had counted on, and 17% said they cost more than they had assumed.
Some projects even caused harm to their homes—and themselves. About 8% said their places were damaged as a result of the undertakings, mostly with repairing foundations, replacing ceilings, and installing roofs. And 6% were injured in the process. So be careful with installing fireplaces and windows and repairing foundations!
“A lot of people do very nice work, but you have to be really aware of what your skills are,” says Theunissen.
So what was the top reason folks were disappointed in the fruits of their blood, sweat, and now tears? About 55% of respondents said the finished project simply didn’t look as good as they had hoped. These folks were the most dissatisfied with their interior paint jobs, floor tile installations, and hardwood floor installations.
When Kelly Whalen demolished her built-in bookshelves as part of a living room DIY, she found it gave the room some much-needed space. Unfortunately, she also found a hidden subfloor made from asbestos(!) tiles. She hadn’t budgeted for a new subfloor — or for the removal of a toxic substance. Yikes.
And there were more surprises. “When we pulled up the tiling, we found we also had to pull out two layers of wall paneling just to get to the edges of the room,” says the Exton, Penn., native. The paneling fix led to a need for new insulation and drywall. What started as a small project quickly ballooned — and so did Whalen’s expenses.
Almost four out of 10 homeowners go over budget when doing a remodel, according to a 2014 report from home improvement site Houzz. Another stat that’ll make you think: Only one in five comes in under budget. Protect your bottom line with these five tips:
1. Reconsider DIY
DIY is cheaper, right? Not necessarily, says Philadelphia-based interior architecture and design expert Glenna Stone. Depending on the project, amateurs beware.
“If you don’t have the expertise, you could end up paying between 10% and 40% more,” Stone says.
Why? While your DIY labor is technically free, your lack of know-how can be costly.
And then there’s hiring and scheduling. A task like moving a wall could mean hiring an engineer and an architect, not to mention coordinating permits. A general contractor knows who’ll do the best work for the best price, and they’ll know when to schedule them to avoid wasting dollars on inefficient use of time.
“If the plumber comes out before you’re ready for him, they’ll charge you for that visit, and then to come out again,” says Stone.
Finally, a contractor is more likely to get it right the first time. There’s nothing like having to buy stuff twice because you messed up. Stone recommends hiring a general contractor for most medium- to large-scale jobs.
Takeaway: Don’t DIY unless you really know what you’re doing. Mistakes cost more than hiring a pro the first time.
If you decide to forgo the general contractor route and hire individual workers yourself, it’s best to get at least three quotes for each service performed. Talking to professionals isn’t just about finding the most competitive price. It’s also an opportunity to figure out what services each individual contractor includes within his fee.
In fact, the least expensive contractor may be a warning sign for inferior construction quality or subpar building materials. A bid worth reviewing should include a line item for every charge.
“‘Everything’ means every detail, from [the] exact kind of sink fixture to brand of roof shingles,” says Dean Bennett, president of Dean Bennett Design and Construction in Castle Rock, Colo. Even the color of the outlets in each room should be included in the bid, he adds.
Takeaway: The more detail that’s in the bid, the more likely you’ll come in on budget.
3. Map Out the Project Step by Step (So You Don’t Miss Anything)
So, you’re planning to put up a backsplash. What do you need to put into your budget? The tile and adhesive, right? And that’s about it?
Try again. Big project or small, the more detailed your plan, the better prepared you’ll be for both the expected and unexpected costs that can (more like will) arise.
When estimating the cost of your project, consider the large expenses, like that tile and adhesive, but also remember the little items like sales tax, delivery charges, shipping charges, the float, caulking, cleaning materials, and more. For bigger projects, you’ll need to estimate engineering costs, interest costs, permit fees, and sewer and water tap fees, says Bennett. The more you can plan to expect, the better.
Takeaway: Don’t forget the “small” costs. Like pennies, they might not seem like much at first, but they sure do add up.
4. Know Where You’re Willing to Cut Corners — and Where You’re Going to Invest
Before setting a project budget, consider what features are most important to you. When it comes to allocating funds, ancillary desires should take second place to your overall project goals.
If, for example, your primary goal is to expand your cabinet space, how vital are custom cabinets or high-end finishes to that goal? “If you’re … OK with using stock sizes, you can save about 20% to 30% on your budget,” says Stone. So if your bottom line is to increase kitchen storage space, stay on budget by sticking with stock cabinets instead of paying more for custom.
On the flip side, if your goal is to gain more glam than storage space, custom cabinets may be where you want to splurge.
Takeaway: Let your goals drive your budget decisions.
5. Pad Your Budget
“For any large renovation, you have to plan for the unexpected,” says Stone. You could open a wall and find electrical work needs to be done. You could find that your chosen tile is on back order and your second choice comes at a higher cost. Stone suggests building a 10% buffer into the budget. Some experts suggest more — up to 25% for those with older homes. According to Stone, that cash cushion is used more often than not.
When the unexpected does arise, it can pay to keep a level head. “Even if you feel pressed for time, give yourself at least 24 hours to make an unexpected decision,” says Stone. When people are reaching their threshold for how long and to what degree they’ve had their house torn apart, “they rush into a decision,” she says. “They regret it almost 100% of the time.”
Takeaway: Pad your budget for the unexpected — and don’t rush decisions.