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Remodeling your home

Workers dump fresh loads of concrete while making a stenciled patio at a home in Lincoln, Neb. Realtors say homeowners should weigh improvement options, whether for personal enjoyment or to increase the resale value.

Sparkling new kitchens and spa-like master bathrooms still sell homes, but homeowners looking for the best return on investment should more often consider minor updates that won’t break the bank, real estate experts say.

Remodeling projects can be daunting, but homeowners who set a budget, define their goals and come up with projects that stretch their dollar the farthest will come out on top.

Realtors say they encourage homeowners to undertake major remodeling projects only for personal enjoyment because often the biggest and best improvements don’t have a dollar-for-dollar return, especially in the short-term.

“The rule I always tell my clients and my sellers is never put a nickel in unless you will get a dime back,” said Gary Dominguez, a Lincoln, Neb., real estate agent with HOME Real Estate who spent 25 years in the remodeling business.

John Bredemeyer, president and founder of Realcorp Inc., an appraisal firm in Omaha, Neb., said the best remodeling projects before selling a home are high-impact but with a relatively low cost. A new kitchen could cost $25,000 or more, but new countertops could be installed for $5,000 or less. New carpet and paint are also good projects to consider, he said.

“The simple things, go ahead and do,” Bredemeyer said. “(With) the bigger remodels, the thing you need to think about is how long you are going to be in the house.”

Completed remodeling projects don’t always translate into a higher resale price, because home appraisals also take into account the value of other homes in the neighborhood, he said.

Bredemeyer’s daughter, Abby Andress, followed her dad’s advice before she and her husband put their three-bedroom, 1978 split-entry southwest Omaha home on the market last year.

They painted their kitchen cabinets off-white, added a cement finish to the bathroom countertops, cleaned the carpets and rebuilt the deck.

“It made it look newer,” said Andress, 30.

The minor updates cost about $5,000. That made more sense than remodeling the kitchen or ripping up a bathroom, she said.

Homeowners embarking on major projects will get the best return on investment with exterior improvements such as new siding, garage doors, wooden decks and windows, according to a 2014 report by the publisher of Remodeling magazine and done in cooperation with the National Association of Realtors.

The best option is adding a new steel entry door, which costs about $1,100 but has a nearly 100 percent return on investment, the report found. The second best project is the addition of a wood deck, which has an 87 percent return, according to the annual report, which compares construction costs and resale values in 100 U.S. housing markets.

Inside the home, attic bedrooms and kitchen projects are the best bet.

An attic bedroom remodel has a nearly 85 percent return on investment, but can cost as much as $49,000. A kitchen remodel averaging around $19,000 will return about 83 percent, the report found.

At the other extreme, a home office remodel offers only a 48 percent return.

In parts of the Midwest, including Omaha, the return on investment for major remodeling projects hovers between 50 percent and 65 percent, according to the report.

Roger Reynolds, a real estate agent with Woods Bros. in Lincoln, Neb., who spent 35 years in the remodeling business, said the benefit from remodeling projects varies from home to home.

For example, the owner of a one-bathroom home can see a significant benefit from adding a second bathroom. The benefit is even greater if the homeowner plans to be in the house for at least five years.

“I’d say absolutely you will get the enjoyment out of it and it will increase the (resale) of the home,” he said. “More than just the monetary rewards, there is the reward of being able to use it and enjoy it while you are there.”

If you don’t plan to stay in the home for long, Reynolds said it may be best to sell your house as is and let the new owners make the changes.

“It’s much better to price accordingly knowing the kitchen or another room is needing some updating and saying, ‘We realize this so there’s room for the buyer to do it according to their taste,’ ” Reynolds said.

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