Repairing vs. remodeling

Repairing and remodelling. These terms are used interchangeably; however, the difference between the two is huge. To make money and create equity, you simply must understand the difference.

The best way to think about this is to visualize an iceberg. What you see above the water is only a small portion of the whole. Over 9/10 of the iceberg is below the surface. I could make some obvious titanic jokes, but I won’t, instead, I want you to visualize that iceberg like a homeowner would.

Home buyers usually value only what they see, so, if they can see fresh carpet, new appliances and counters then they mentally attribute some value to them. Conversely, what they can’t see it, they won’t value.

This is the critical difference between repairing and remodeling. Repairs are inevitably costly and time consuming but, don’t necessarily create any tangible value. Yes, this is a paradox but it is also true. When you go to resell your house, there is an expectation on the part of the buyer that, things work. Take the roof; buyers tend to over-focus on the condition of the roof. The expectation is that it won’t leak. If the roof has new asphalt shingles great, people value that. But imagine for a moment you had remodeled this house. You know it needed new shingles, what you didn’t know, was that that the roof has been leaking for a long time so the sheathing was rotted along with the roof trusses.

So, what should have been a simple reroof turned into a costly repair item to fix the sheathing and trusses. A buyer will value the new roof but not the structural repair.
The new shingles then are an example of a remodel item, something that adds value faster than cost.

The fix to the roof sheathing and trusses on the other hand an example of a repair, that while although necessary, doesn’t add any resale value.

BuildSmart take away: Understand the difference between repairs that add cost and repairs that add value.