From file "065_rcs" entitled "rcCvsV3.qxd" page 01
From file "065_rcs" entitled "rcCvsV3.qxd" page 01

Say you own a home worth $400,000. Your home needs a new roof. You find a contractor and he does the job. Cost? $12,000. A year later, you, the homeowner, decide to move. How much did spending that $12,000 on your roof add to the price you can ask for your home?

Here's the answer: $10,164.

That's according to the Cost vs. Value Report, commissioned and assembled by our sister publication, REMODELING. Here's how it works: HomeTech Information Systems, a company that specializes in estimating software, develops a cost figure for a range of projects, including exterior projects. Then members of the National Association of Realtors in 60 metro areas around the country are asked what kind of value that project would add, should the home be sold in the current housing market.

For example, it would cost $27,236 to build a 200-square-foot sunroom, including footings and slab-on-grade foundation, in Burlington, Vt. The same room, built in Sacramento, Calif., would cost $37,547. (Does the discrepancy in price ring untrue? Think of labor costs in California, versus largely rural Vermont. Also, consider demand.) If both houses were sold a year later, that Vermont sunroom would add $15,000, or about 55%, to the value of the home. In Sacramento's hot housing market, the return would be $28,499, or 75.9%.

Skeptical? Bear in mind that these are approximations. Home values change by region, city, and neighborhood, and contractor project estimates, of course, can vary wildly. Most consumer purchases are disposable. New cars, for instance, lose a chunk of their value the instant you pull off the lot. Laptops get thrown away after four or five years.

Consumers, however, regard their homes as an investment and expect the money they spend on those homes to bring a certain return when the time comes to sell. What's useful for you and your customer to know is what that return might be.