Here are what we see as the best and worst home improvements to make now:

The best home improvements to make now

Kitchens and master baths

Improvements in these key resale areas consistently garner a high rate of return. One note of caution, any renovation that is not well thought out or poorly constructed is not going to pay. In today’s highly competitive market, substandard quality and design will stick out like a sore thumb. At the same time, don’t feel locked into tradition. Many homeowners are converting unused garden tubs into larger walk-in showers – a no-no in the past now made practical due to a booming aging in place market.

Removing a wall(s) to join spaces or maximize space

This may be very simple or involve structural issues, but an experienced, licensed remodeling contractor can turn two small rooms into a great family room or expand a small kitchen, bedroom or bathroom to improve its functionality. You’d be amazed at what a large difference this relatively minor change can make.

Conversions of walk-in attics to extra living space

This project makes sense because you already have a roof above and a foundation below this space, so even if you do have to modify the area structurally, you’re still realizing a savings over building from scratch. As roof pitch has increased, it’s not uncommon to be able to reclaim 1,000 square feet up there; what to do with that windfall leads to #4:

Home offices

Twin trends of increased connectivity and corporate office downsizing have seen more people working from home at least part of the time. While a basic den used to suffice, it’s now not uncommon to see two home offices, one for each spouse. Untapped attic space is a cost-effective place to put these connected and functional areas.  If possible, plan this space so it can be multi-functional. Being able to function as a bedroom or bonus room will provide enticing options for future buyers.

Adding an extra room with a bath

Adding a bedroom along with a connected or adjoining bath makes all the difference.  Why? Because it gives future buyers added flexibility – it can be used as a bedroom for family members or guests, a home office that can accommodate visitors, a playroom or more.

Outdoor Living Spaces

Any expansion that better utilizes outdoor space, such as porches, lanais and grilling areas, is effective because it adds living space without adding structural costs. Cost-conscious consumers also want the ability to entertain family and friends at home, making this an ideal project.

Adding Granite

Thanks to its popularity, the price of this durable and beautiful surface material has decreased while the colors, styles and options have increased dramatically.  (Read Six Misconceptions About Granite to learn more.)

Enlarged Garage

While a two-car garage used to be the norm, more buyers are looking for space for three. It makes sense when you consider the space needs of teenage drivers, multiple family cars, small boats, jet skis, lawn mowers, lawn tractors, golf carts, and all that “stuff” that accumulates.  If you plan to live in the house for several years and benefit from the addition in the meantime, it may well be worth the investment.  Also consider adding living space above a new garage, which can have multiple uses – a man cave, office, playroom, arts and crafts room, etc. – and makes the project more cost effective, since you already have a foundation and roof planned for the garage addition.

The worst home improvements to make now

Here are some projects that we generally advise against in our area:

Extensive, Single-Purpose Home Theaters

As technology changes at an ever-increasing pace, these areas may not be as practical as they once were. In just the past few years, flat screens have gone from a novelty to a standard, and new introductions like 3-D TV are making the technology behind spaces that are just a few years old obsolete. Heavily automated areas can be costly to maintain and upgrade unless you are working with a forward-thinking provider.

Under-improvements

Particularly in kitchens and master baths, you want to keep up with the level of quality and finish exhibited in comparable homes and not sacrifice the return on your enjoyment and investment to save a few pennies. We recommend that clients opt for tile or natural stone over vinyl floors; take out preformed shower stalls and tubs and replace with enamel tubs and tile surrounds; consider raising standard counter surface heights; and skip solid surfaces other than granite that are more expensive and outside the mainstream.

Do-it-yourself projects

While tackling a project yourself can bring a great deal of satisfaction, be aware that projects that don’t look professionally done will standout to savvy buyers.  If poorly executed, such projects can negatively impact your property’s saleability and even negate the savings you gained by doing it yourself.  Additionally, not pulling the necessary Building Permits for electrical, plumbing or mechanical or not having proper inspections done throughout the project could prove costly. Failure to do so could subject your DIY project to financial penalties from the local Residential Code Enforcement Department or even jeopardize a future sale if construction is not compliant with local Building Standards and/or permits were not filed.  (Read our Whether Permitting article to learn more.)

No matter which project you’re considering, remember to take into account how long you’ll remain in your home and how much better it can make your life as you weigh its value.

Here's why: A full-service, design/build company brings a big-picture vision to your project while also keeping a keenly focused eye on the details. They design, manage and build your project from scratch – taking you from start to finish. This eliminates the "middle man" – which in most cases ends up being the homeowner – who traditionally goes back and forth between design professionals, contractors and project managers, who may be speaking completely different languages.

If you've ever looked at construction drawings on a piece of paper and then walked through the finished project, you know how vastly different the three-dimensional version can be. A good design/build contractor with diversified experience can efficiently design and then work with those plans – or in some cases, your architect's – to truly bring your concepts to life. Drawing upon his experience of what has worked in the field during previous projects, he can offer suggestions or alterations that make all the difference. Instead of just building "to plan," a design/build firm is going to ensure that the plan will work on all levels – structural, aesthetic, functional and budgetary. They'll suggest changes like making certain that windows are symmetrically placed to improve a traditional home's façade or relocating a fireplace to open up a room addition, improve a view, or make sure the TV placement flows with the seating area. When they work with an interior designer, as we at Palmer Custom Builders do, they'll ensure that the homeowner's existing or new furniture not only fits into the new space, but also functions well in its designated area, so that each room ultimately works in the intended manner.

A full-service, design/build company also adds value by making sure that the project has a defined scope from the very beginning. There's nothing more heartbreaking to a homeowner than working with an architect to create the perfect plan and then discovering that the cost of building that plan far exceeds their budget. By marrying the design and its practical implementation from the very beginning, a design/build firm creates a project that not only works, but works within the client's budget. Since they have an overall understanding of the scope of work, construction costs and your priorities, they can look at selections line by line, keeping in mind the big picture and how each choice impacts that vision. In the end, the marriage of a grand-scale vision and the laser-focused implementation of its details that a full-service design/build firm brings results in a project that looks exactly as you envision and functions as you require. No matter what the scale of your project – from the smallest renovation to building a new home, a full-service, design build company takes a project from inception to completion – and in the end it shows!

Yet when you're considering a possible renovation, where do you even begin? When we meet with potential clients, we often see them make two different mistakes that we want you to avoid - not knowing what they want and not knowing what they want to spend. Here's how to begin your project the right way, so you won't fall into either camp.

First, take the time to make a list of your concerns. Simple statements like: "I hate my kitchen. My master bathroom is ugly." are fine at this point. Just jot them down and then prioritize them. By doing so, you'll naturally begin to define the scope of your project. Also, think about what isn't working for you now. Don't fret about how to design or construct it at this stage, just think about what you would really like to change or add. A professional, experienced remodeler will know exactly how to achieve the end results you want and will guide you through the process.

Next, give some thought to how much you really want to invest in your home. Since they don't do this every day, most homeowners don't have a solid grasp of what a renovation actually costs, but that's also okay at this point. Initially, your main concern should be with what you want to invest. Consider your home's value and the market value of other homes in the area. Bear in mind that we are living in unprecedented real estate times, so if a Realtor says your home is only worth $X per square foot, look at the history of the area and realize that value could escalate again in the future. Then take into account intangibles like how long you plan to stay in your home – is it one year, five years, ten years, or are you never planning to move. If you're considering moving, ask yourself whether you like your current home's location, the schools your children attend, the neighborhood, its level of convenience, etc. Ask whether you really need a larger house or just one that better fits your lifestyle. (Read our 10 Reasons to Renovate Instead of Moving blog article to learn more.)

Going through this process will help you crystallize your thinking. You may decide that you need a new home, which is great and you'll have made a well-informed decision. But you may discover that to fall in love with your home all over again, you just need to update a kitchen or bath, remove a wall to better utilize existing space or add more room to entertain.

If that's the case, then it's time to talk to a qualified, professional remodeler who has substantial experience dealing with the type of projects you're considering. Being honest with your contractor about your hopes and budget is critical, because at this point you will begin to officially define the project's scope and determine whether it is realistic within the confines of your budget. Don't lose heart if the initial proposal comes in over budget, because if you have clearly prioritized, a qualified, professional remodeler can find practical ways to phase in the project over time as your budget allows.

Moving expenses

RemodelorMove.com estimates the average cost of moving a typical $200,000 home (Charlotte’s April 2010 average sales price was $201,410, according to the Charlotte Regional Realtors Association), at a staggering $15,000 to $50,000. That includes moving preparation, the actual move, Realtor commissions, upfits and purchases for the new home, and a possible increase of $0 to $10,000 in property taxes.

Fees

That figure doesn’t include seller-paid closing costs, which typically run 3-5% of the sales price.

Hidden issues

While you know what’s in your home, you may be inheriting someone’s problems if there are issues that don’t show up on your new home’s inspection report. If the seller is making repairs, make certain they have been properly completed by a licensed, professional contractor -  electrical, exterior wood, roofing, boxing, siding and subfloor structural issues often won’t become apparent for several months or longer, when the cost to re-repair correctly will come out of your pocket.

Moving disrupts families

You’ll need to pack up personal belongings and keep the house in “ready-to-show” condition to be prepared for prospective buyers.

Moving disrupts networks

In addition to the friends you’ll be leaving behind, there are school, church and social changes that impact the entire family.

You may have to move twice

If you haven’t already located or closed on your new home by the time yours sells, you’ll need a temporary place to stay.

Double jeopardy

If you move before your existing home sells, you’ll need to cover two mortgages for an undetermined period of time.

Quicker than you think

Depending on the scope of the project, here are some surprisingly fast (approximate) construction times for common projects done by a licensed, professional contractor: the average room addition takes five weeks, a complete kitchen remodel 6-8 weeks, and a complete bathroom remodel 4-6 weeks.

Timing is everything

While the housing market is improving, values are not yet back to 2006 levels – which means holding onto your home until the market rebounds may make financial sense.

Solid investment

If planned and executed properly, you may recoup a large portion of your renovation expenses, particularly if you plan to stay in your home for a few years. Remodeling Magazine’s Cost Vs. Value 2009-2010 Southeast report puts recoup rates at 90% for attic bedrooms (mid-range project), 84.4% for basement remodels (mid-range project), 74.6% for a mid-range major kitchen renovation or 64.9% for an upscale version that includes features like granite countertops, 71.9% for a mid-range bathroom remodel or 64.3% for an more upscale bath renovation, and an impressive 146.8% for steel entry door replacement (mid-range project).

When considering those returns as well as all the issues involved in deciding whether to renovate, it’s vital to weigh what award-winning home improvement writer and author Kathy Price-Robinson wrote on her remodeling blog: “If you plan on living in your house for more than five years, you must factor in the quality of life increases as well as the payback on your investment. After all, is it a home where you live and shelter your family, or is it just an investment like a mutual fund?”

As part of its efforts to raise funds to build Habitat Homes, the organization created ReStores, which accept and then resell donated materials, with all of their profits benefitting build projects. Along with furniture, home décor and other household items, the ReStores accept new and used building materials, such as doors, windows, light fixtures, plumbing, trim, cabinets, appliances, flooring, insulation, etc.

How does that relate to a renovation project? Oftentimes, homeowners will choose to undertake a project like a kitchen renovation to improve the function, flow and appearance of their space. That sometimes entails replacing serviceable, yet outdated in appearance, appliances, cabinets and fixtures.

By working with a contractor who can coordinate the orderly deconstruction of the space and the subsequent donation of these elements to Habitat for Humanity, homeowners can do a good deed that reaps them considerable rewards.

Here’s how the process would work on a typical kitchen renovation. As we approach the demolition phase of an applicable project, we would work closely with Habitat for Humanity to coordinate deconstruction. Habitat would then team with us as a subcontractor, carrying the required Workers Compensation and Liability Insurance. Their team would carefully go in and remove existing kitchen cabinets, outdated but functional appliances, and other fixtures that would be appropriate for resale at one of the local Charlotte ReStores.

This benefits the homeowner in several ways. On an altruistic level, you are giving construction materials to people who need them and who otherwise may not be able to afford a necessary change. It also allows you to “go green” by repurposing these materials by getting them into the hands of someone who can use them instead of merely throwing them in a landfill.

On a financial level, many homeowners want to do something good for the environment, but fear that it will cost them more – this is actually a way to save green while going green. Here’s why: It offers a significant savings on the costs of demolition and disposal. (Just think of how many dumpster loads of materials you won’t have to pay to remove, depending on the size of the project.) Finally, it allows you as the homeowner to receive a tax-write-off for your charitable contribution (consult your accountant for specifics on your personal tax situation).

With so many benefits, working with a contractor who has a relationship with Habitat for Humanity can help you save dollars while making sense for the environment and people in need. “Last year, the Charlotte ReStores raised enough money to build 12 complete Habitat homes,” notes Donation Manager Tim Murphy.

Granite is Expensive. Actually, granite has become one of the more cost-effective options among solid surfaces. Thanks to its popularity, supply has increased, bringing the cost down by $10 to $15 dollars a square foot over the past several years. Some of the newer, fabricated materials are pricier.

Granite is Difficult to Maintain. Some homeowners worry about spotting or discoloration, but those fears aren’t well grounded. According to the Marble Institute of America, granite just requires warm water, mild dishwashing liquid and a soft cloth to maintain. If you can use a spray bottle like one you’d use to apply glass cleaner, you can apply the latest generation of sealants.

Granite Locks You into a Certain Style. There are myriad colors, shades and tones in even a relatively plain piece of granite. As opposed to a solid-color surface material, these variations give you unprecedented design flexibility – i.e., when you tire of a wall or accessory color, simply pick a different shade in the same stone and redesign from there.

Granite Isn’t Green. Granite is a natural material, so it’s difficult to get closer to nature.

Granite Isn’t Durable. Granite has withstood the test of time. There’s a reason we say “as hard as a rock.” It is heat-resistant and won’t crack under the pressure of normal wear and tear.

Granite Isn’t a Solid Investment. The kitchen is the area where homeowners are likely to recoup the most money from renovations – nearly 85% according to CNNMoney.com. And when it comes to the changes homeowners are looking for in kitchen renovations, granite is definitely a material of choice. It’s expected in high-end homes and is becoming an assumption in moderately priced residences as well. In this challenging market, you want to give your home every edge when it comes to resale, and granite in the kitchen has become an indicator of a quality project in what many buyers view as the most important room in a house.

The EPA’s new Lead Renovation, Repair, and Painting rule takes effect April 22, 2010, and requires that contractors working in a residence or facility built before 1978 where children are present must be an EPA Certified Renovator.

This rule was put into place after a four-year study determined that renovation work, including weatherization, window replacement, HVAC modifications, demolition of interior plaster walls, removal of exterior painted siding and trim, and drilling and sawing into painted wood and plaster, exposes both occupants and workers to the same kind of hazards as lead-paint abatement. That’s because, as the EPA notes, the most common manner in which people are exposed to lead is through lead contained in dust. (Just think of all the dust that demolition, drilling, sanding and drywalling stir up over the course of a renovation project!) As a result, all remodelers, painters, plumbers, HVAC technicians, etc. who work on homes or child-occupied facilities, such as schools and daycare centers, built before 1978 must have certified workers and their firm must be certified with the EPA. This rule applies to all projects (that homeowners do not do themselves) that disturb more than 6 square feet of a potentially lead contaminated surface inside a building or 20 square feet outside.

Here at Palmer Custom Builders, both Gary Palmer and lead carpenter Hunter Moxley hold this EPA certification. The training they received taught them how to effectively contain a work area to prevent the spread of possible contaminants into other areas of the home; proper construction and demolition methods designed to minimize the creation of dust; and EPA-approved clean-up methods designed to eliminate any lead residue.

As a homeowner, it’s vital that you check with your contractor to make certain that they’ve obtained this certification. Of course, there is the obvious reason – you want to be sure that your family is protected and that the contractor you hire takes his responsibility to care for them seriously. Yet it goes much deeper: the manner in which a contractor treats this certification is, in many ways, a reflection of their integrity that is likely to carry over into other aspects of how they run their business. In addition, not obtaining the certification before working on a project covered by this rule could cause a contractor to incur a stiff EPA civil fine of up to $32,500 per offense as well as an additional criminal fine of $32,500 plus jail time for knowing and willful violations of the requirements (in NC the fine is $750-$1,000 per day until resolved). Such hefty consequences may impact a contractor’s overall financial stability as well as their ability to complete and then stand behind your project. At Palmer Custom Builders, we are taking our responsibility to your family one step farther by testing any children residing in a home built before 1978 which has lead-based paint before we even begin work on the project. It’s just one more way we are striving to keep our customers safe.

Unfortunately, saving a dime by hiring a discount contractor who doesn’t know how to properly do the work ends up costing consumers millions each year, according to the Better Business Bureau. If you’ve watched HGTV’s latest sensation, Holmes on Homes, you’ve seen the Canadian contractor spend weeks trying to correct the damage done by supposedly “minor” repairs as well as major renovations that were performed incorrectly. Hundreds of square feet of tile that had to be ripped up and replaced due to improper underlayment, entire basement upfits torn down when plumbing pipes were installed by cutting through structural members, roofs removed due to improperly placed vents that caused water damage. The list goes on and on.

Here in Charlotte, we at Palmer Custom Builders often are called in to correct the substandard work of unlicensed handymen and the subsequent damage it causes. We’ve seen incorrectly constructed dormers cause unbelievable damage to exterior and interior walls, “minor” water leaks that result in entire floors having to be replaced, and dangerous wiring that presents a very real fire hazard.

It generally starts with a well-intentioned homeowner who is trying to save a few dollars of their hard-earned money, sometimes on a minor project. For example, one Charlotte homeowner we’ve since worked with initially hired a questionable contractor to install a closet in her bedroom. When that turned out okay, she had him build a downstairs closet as well. Things started to go downhill when she retained him to create a basement bathroom. There were some peculiarities with the plumbing license, but the homeowner really noticed that something was awry when she happened to look at the packaging of the water pump that was delivered to her home. “I was paying for a really good one, but the pump that was actually delivered to my house was not rated to be used below grade,” she relates. “I decided then and there that I wasn’t going to do this to my house, so I hired a licensed electrician and plumber. Unfortunately, I already had paid the first guy $3,000 for the downstairs bathroom.” Instead of refunding her money, “he worked it off by doing other projects, like my basement steps, but he wasn’t happy about what he had to do, and his work showed that.”  The homeowner then hired a second contractor the plumber recommended to complete the jobs that the first contractor didn’t finish, like building a basement staircase, but unfortunately, that didn’t happen. “He did a good job, but he just didn’t finish. He never came to do the final trim; he kept saying he was going to come back, but he never did,” the homeowner relates.

By the time she found, researched and hired Palmer Custom Builders, this homeowner had a list of about 60 items that needed to be corrected in her home. When we brought our team of professionals in to look at the house, the results of dealing with unlicensed people were apparent. A smoke detector had been completely sheetrocked over. When we looked into the electrical work, we discovered that a lamp cord had been used inside the ceiling, instead of the construction-grade interior wiring that code requires and common sense dictates. The wiring was so poorly thought-out that it actually required flipping two separate switches to get the light over the pool table to turn on. In the bathroom, fans were not vented to the outside, and GFIs were not in place. Structurally, a new wall wasn’t close to being straight. We corrected these and many other issues while completing the kitchen and master bath renovation the homeowner had desired – all in about eight and half weeks, as opposed to the over one year the first gentleman took. The result is that this homeowner now has a beautifully updated, functional home in which she feels comfortable raising her family.

“Now, I’m very happy with everything,” she relates. “In the end, you get what you pay for. If you want to pay a little bit, that’s just what you’ll get - a little bit. I learned that lesson three times. By the time I hired Palmer Custom Builders, I was more than willing to pay a little more for a professional job, but I also expected a little more for my money. The bottom line really is that you get what you pay for, and the difference between Palmer Custom Builders’ work and what had been done previously was the difference between night and day.”

The truth is that whether your project is large or small, financing is still available for qualified buyers and homeowners, but finding the right financing package is more important than ever.

Jack Snypes, a Renovation Specialist for Wells Fargo Home Mortgage in Charlotte, N.C., said there’s always a need for basic home improvements because of the aging U.S. housing stock. “And, when it comes to purchasing a home, renovation loans give buyers options when considering houses that aren’t perfect,” he said. “At an average age of more than 35 years, the nation’s housing stock is in need of improvements and repair, so there is demand for mortgage products that address the needs of buyers who are looking at homes that need TLC.”

To make it easier for lenders to offer renovation loans, the federal government has several programs they can turn to. (Talk with your lender to see if your home qualifies for these or other programs.) The Federal Housing Administration’s (FHA) Streamlined 203(k) is one of the more popular renovation loan programs. It permits homebuyers to finance as much as an additional $35,000 into their mortgage to improve or upgrade a home before they move in. The loan is generally used to update or improve a house or condominium needing essential repairs, such as new wiring or plumbing, weatherization, lead-based paint stabilization or abatement, roof replacement, kitchen and bath renovation or space reconfiguring, or interior upfits.

Other renovation programs like the Fannie Mae HomeStyle® Renovation Mortgage offer higher loan limits for more extensive projects. The HomeStyle Renovation Mortgage allows borrowers to finance improvements of up to 50% of the as-completed value of the home with a first mortgage, while offering lower rates than second mortgages, home equity lines, or credit card debt. Another plus is that this loan allows homeowners to finance “luxury” items, such as swimming pools, major additions, sun rooms and outdoor living spaces.

“Renovation loans are great tools for homeowners and important for community revitalization,” Snypes said. “Investing in a home contributes to the financial well-being of a community, because the homeowners are preventing older homes from deteriorating and falling out of the housing stock.”

When you are working with a qualified contractor such as Palmer Custom Builders, these loans also can help turn a diamond in the rough into the sparkling heart of your family’s home life.

If you’re like most people, you probably can’t resist a great deal. That orange cashmere sweater definitely has more appeal at 75 percent off than at full price, and the temptation to extend your vacation is much higher when extra nights are half off.

While these uncertain economic times have us looking for bargains in more facets of our lives, one area where you simply can’t afford to skimp is in selecting a contractor to renovate or repair your home.

"It’s not your lucky day when a contractor shows up on your doorstep offering a too-good-to-be-true deal on a project." said Steve Cole, former president and CEO of the Council of Better Business Bureaus in a warning to homeowners. "The salesperson may claim he has materials left over from a recent job at your neighbor’s house or the ‘house down the street.’ This is a common ploy of fly-by-night contractors who are based out-of-state and use their pick-up trucks as their place of business."

Complaints against incompetent contractors are among the most common received by the BBB and range from poor workmanship and incomplete job performance to actual home foreclosures. Not to mention the nightmare scenario of uninsured workers and the workman’s comp claims that can arise from that.

While you may not entrust a major renovation to someone who shows up on your doorstep, you may give in to temptation for a supposedly small repair. That’s a bad idea, because minor repairs can have major ramifications. Repairing a door jamb without properly installing flashing, for example, can lead to water damage in the decking below, in the adjoining wall, and to the siding covering that wall. It also can create an ideal environment for insect infestation, which will lead to additional damage years from now. A qualified professional, in contrast, will do the job correctly the first time and is capable of dealing with whatever he encounters – saving you much more money in the long run.

Other questionable bargains may come from friends or relatives. Your unemployed neighbor who dabbles in deck repair might look like a great deal until you notice an unexpected slope to your decking. Another case that comes to mind is an area couple whose father flew in from out of state to do their wiring. Unfortunately, much of his work was not up to local code, and it had to be ripped out and redone before their project could be completed.

The bottom line is that while it’s easy to be emotionally blinded by a good deal, you need to look at exactly what you’re getting – and the long-term reliability and stability of the company you’re getting it from – for that bargain price. There’s nothing worse than paying for the same repair twice, unless it’s paying twice and then paying for the additional damage caused by that poor repair.

As Cole notes: "There are thousands of reputable contractors who will deliver quality work, on time and within budget. Consumers can avoid costly mistakes and scams by doing some research before opening their wallets."