Home Economics: Recouping costs at resale is iffy, at best

Time was, and not all that long ago, that putting money into your house before putting it on the market paid off at resale.

But the "sluggish housing market continues to push down remodeling return on investment," Sal Alfano writes in the most recent cost vs. value report issued by Remodeling magazine, with the overall average cost-to-value ratio dropping to 57.7 percent from its peak in 2005 of 86.7 percent.

Even though the cost of remodeling itself has continued to fall, that is effectively counteracted by a drop in resale values, Alfano writes.

Bottom line: There is no guarantee that any improvement will boost the sale price of a house, especially in a real estate market in which even multiple offers typically result only in an amount near or slightly above asking price.

Yes, doing the necessary improvements to a house will help it compete. If two houses are for sale on the same street for the same price and one has a new roof while the other needs one, it's not hard to figure out which might sell first. But might is the operative word in an era when little about the real estate market is a certainty.

New roof or not, a house's list price must be appropriate for the market to attract buyers who likely will not only expect leak-free conditions, but also a furnace and air-conditioning that work properly.

Market observers say some sellers are still demanding prices well above what's appropriate, in an effort to turn their improvements into more cash. That, they say, is an attitude that keeps many listings sitting idle, some for a year or more.

Not to mention that it assumes the sellers' idea of improvement is in sync with the opinions of the buyers they wish to impress.

Harris Gross of Engineers for Home Inspection in Cherry Hill gets to see the results of homeowners' misguided assumptions about what it will take to sell.

Assumption: Your house has just one bathroom, and you need at least another half-bath (also known as a powder room) for buyers to even consider you.

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Home Economics: Recouping costs at resale is iffy, at best