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2011-2012 Cost vs. Value: Which Remodeling Projects Pay Off the Most?

By Melissa Dittmann Tracey, REALTOR® Magazine

When tackling home remodeling projects, you’ll find some projects pay off more than others at times of resale. Remodeling Magazine, in conjunction with REALTOR® Magazine, recently released findings of its annual Cost vs. Value report for 2011-2012, revealing which remodeling projects offer the biggest bang for your buck.

Overall, the trend right now is replacement over remodeling–swapping out the old for the new rather than doing a total gut job, which can be much more costly.

This year’s Cost vs. Value report found that exterior replacement projects–such as new garage doors and a new entry door–offer some of the best returns at resale, allowing home owners to recoup close to 70 percent or more of the costs of the project at times of resale.

The following are the top, mid-range projects from this year’s report, based on what home owners stand to recoup at time of resale:

1. Replacing the entry door to steel

Estimated cost: $1,238

Cost recouped at resale: 73%

2. Attic bedroom (converting unfinished attic space into a bedroom with bathroom and shower)

Estimated cost: $50,148

Cost recouped at resale: 72.5%

3. Minor kitchen remodel (including new cabinets and drawers, countertops, hardware, and appliances)

Estimated cost: $19,588

Cost recouped at resale: 72.1%

4. Garage door replacement

Estimated cost: $1,512

Cost recouped at resale: 71.9%

5. Deck addition (wood)

Estimated cost: $10,350

Cost recouped at resale: 70.1%

6. Siding replacement (vinyl)

Estimated cost: $11,729

Cost recouped at resale: 69.5%

Comments
  1. If you’re looking to sell your home it can be worth investing in remodel projects to spruce it up. The kitchen is often a selling point. You don’t need to do a complete remodel. Even small changes like a new coat of paint or some new lighting fixtures can make a difference.

  2. Other small things that add up include replacing faucets, hinges, and knobs throughout the house to give a fresh look. New light fixtures also help, but clean windows speak volumes about the care a house has received!

  3. While interest rates are low, buyers are putting all their dollars into the purchase price, and there is not a lot left for any BIG renovations. An simple upgrade of new stainless appliances, granite counters, new cabinets in a kitchen, a new sink, toilet, fixtures and mirror in the bathroom can get them off the fence and into a transaction.

  4. Alan Bonny

    In addition to the suggestions listed in your article, it would be a good idea to pressure wash all surfaces, such as sidewalks, driveways, garage floors, existing decks, fences and any siding that can withstand the pressure. Even if there are nicks, chips or cracks in the cement, it still looks better bright and clean.
    Another consideration would be painting the garage floor with one of the new epoxy finishes. The ladies appreciate being able to get into or out of their car into a nice, clean and well lit garage especially in challenging weather. Just a few suggestions I’d like to see done more often.

  5. Erin Haber

    Small remodeling projects that add value to your property are well worth the time and investment. If you are selling your home it is more important than ever to pay attention to details – especially in todays market. Buyers have higher expectations and more choices. A property that has been updated gives buyers the impression that it has been cared for and maintained. Buyers are more willing to move forward with an offer and more likely to pay more for a property that is in better condition. So paint a room a neutral color, add crown molding, remove wallpaper – these are some inexpensive ways to update a home. Simply cleaning and removing clutter can also create more space and add value without spending much money.

  6. CLEAN IS FREE! And by clean, I mean DETAIL YOUR HOUSE like you detail your car…tops of windows & doors, THE WINDOWS, baseboards, THE HVAC, the exhaust fans in kitchen & baths, INSIDE THE RANGE HOOD, INSIDE THE OVEN, INSIDE THE REFRIGERATOR, clean out your closets, dust bunnies under the beds and don’t forget THE BATHROOMS–recaulk, get the grunge out of your shower doors, put up a new shower curtain, and don’t forget to MAKE THE BED & DO THE DISHES before a showing!

  7. I just don’t understand why people put ANY money into their house to make it sell! As the data above shows, you’ll never get 100% of that money back, ever. Just lower the price to get it to sell. Value-wise, that is your best option. I wish more real estate professionals would give this honest advice to their clients.

  8. Here in Charlotte, we’ve seen outdoor hardscaping recoup a significant percentage for the sellers. Of course, living in an area that enjoys 4 seasons helps keep that percentage high for our homeowners!

  9. Ken Hunsinger

    A better source on what effect remodeling has in the market may be a Real Estate Appraiser. In the 30 years I have been appraising I have never adjusted because someone has replaced a garage door with a different one. Your assumption is that no one else in the sales market has replaced a garage door and that the buyer’s in the market know you paid $ 1,300 for the door and they like the door so much they are willing to pay $ 1,000 more for the house. This normally will not show in the market and the appraiser will not adjust. Normally the appraiser adjusts a negative factor for a non functioning door. I have never seen a positive adjustment for a house with aluminum or vinyl siding. In your example the buyer would see the home with siding and tell his RE agent I’m going to pay $ 8,151.65 more for that house because it has siding. Again you are assuming the other homes do not have wall insulation and that the buyers in the market want and are willing to pay more for the siding. Appraisers look at the sales in the market area of the subject and adjust based on the “markets” reaction (Buyers and Sellers) to features such as you mentioned. To put in a percentage to the nearest 10th in misleading and for the most part untrue. A deck is another interesting feature. Without evidence to the contrary, to an appraiser a deck is a deck. Meaning if we see a deck on comp 1 and 2 and the subject has a deck, to the appraiser the decks are the same. Normally the market does not react to every difference or amenity in the property, especially at this time, and at the rates you are stating. It’s quite clear those numbers as you stated are from the remodelers that want to convince you these remodels are worth the cost. There not. You remodel for your comfort and enjoyment, don’t count on getting much back on a sale.

  10. Another thing to consider when remodeling is the bathroom(s). Nothing like seeing a remodeled kitchen and updates throughout and enter an original period bath without any updates :0(

  11. Where did those figures come from?? I agree with Ken Hunsinger, the appraiser! Any realtor counseling his/her sellers to make these expenditures in this market is doing his/her clients a huge dis-service. First of all the realtor has to have experience with remodeling and updating before giving this level of advice.

  12. Vicki Keeler

    This article is very mis-leading. I have been appraising 24 years and have always told homeowners to remodel their home based on “creature comforts”. Do what you like, for you. Most people buy a house for their home. Not to make money. Same with a remodel. Yes, kitchens and bath remodels help show a home and perhaps sell at the higher range of the market. However, in this economy, appraisers are not seeing a dramatic difference in remodeled homes vs non remodeled. When you are under pressure to sell, you don’t wait for your %72.1 recoup value on your kitchen remodel. The reader comments were very good. Little details enhance appeal. Remember, the appraiser does not set a value, they measure the market.

  13. Mike Cutler

    I’m a real estate appraiser with 25 yrs experience and this survey is considered to be very unreliable by appraisers. The typical buyer generally doesn’t view prospective properties with a checklist in hand to take very detailed notes about each competing property. Sure, there’s the occasional buyer who will do that, but it’s not the norm.

    So when a buyer eventually purchases a house they’re generally not doing it on the basis of having added up all of the small incremental items that contribute to value. That’s why you don’t see appraisals making adjustments for properties have a new entry door. It’s because if you interview buyers and sellers, like I’ve done thousands of times, they’ll rarely remember such small details among all the houses that were viewed. They typical buyer might view 20-30 houses before buyng. If you ask them to quantitatively tell you how the house they purhcased compared to the other few dozen, they’ll only be able to tell you in the broadest terms. That’s why appraisas don’t adjust down to the level of some of these very small improvement items. How in the world can this survey calculate the contribution towards value of such small items if buyers don’t even consider them? In my opinion, it can’t.

    Finally, the contribution towards value of a particular improvement item can change depending on what sort of house you are starting with. So the contribution of an extra bedroom, for example, is likely to be much higher if you are staring with a 2-bedroom house as compared to a 5-bedroom house. These figures provided in the report don’t even consider the starting point.

    The typical seller is best served by making modest updates to their house and making sure it’s newly painted and the floorcoverings are in great shape. Forget about significant improvements.

  14. Steve

    The article isn’t looking at it from an appraisers point of view, it’s from a buyer or seller point of view. Sure, “market value” in the neighborhood dictates, for the most part, the sale price, but why do you think companies pay so much for product packaging color, design, placement, even the font? Because in order to get customers (buyers) interested in the product (house), you need to draw their attention. An appraiser sees “deck” on comp 1 and 2, but a buyer sees “multi-level deck with octagon sitting area” versus “15′ by 20′ square deck.” The final numbers could be 5k or 10k apart, but maybe that deck is the must-have item on the buyers list that pushes it into a sale.
    We all like to think “This is the house”, but I don’t know anyone that lives in their home for their lifetime anymore, so keeping in mind the returns on investment is something every does and would be foolish not to.

  15. Isn’t it amazing how much a new garage door can really do to spruce up the curb appeal of your home. These are some great stats to tell my customers!

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