It’s rare to get a dollar back in value for every dollar spent remodeling and updating your home. Some expenditures return more than others. Published reports indicate an average return on bathroom remodels at 68% and kitchen remodeling typically only returns 46% of the cost. Of course, these are National averages and local research is recommended. Remember, real estate value is about what buyers are willing to pay for something – not the cost. An owner may have spent $50,000 on updating their weekend cabin, but what are buyers paying for similar remodeled homes in the neighborhood? That’s what appraisers will focus on when coming up with a value. It always comes back to the comps.
Example of possible loss of value: Walk-in bathtubs are promoted for ease of access for older and/or disabled people and the total purchase and installation costs may range from $5000 to $15,000 or more. When it’s time to sell, many buyers may view it as a negative, and discount the purchase price, because it is something they will replace. Perhaps a curbless or roll-in shower would be a better choice.
When upgrading a home for value, make sure it’s something that will meet market expectations and not just for your own satisfaction. Of course, some remodeling is for the homeowner’s needs and not expected to give a dollar for dollar return. A pool will certainly be worth less than the cost to build, but a family will likely get years of enjoyment from it.
People should realize that they rarely get 100% of the cost of remodeling and upgrades back when it comes time to sell. There are exceptions, house flippers are professionals, have a team of craftsmen to do the work, have researched the market and know where their money is best spent to will yield the highest return.
My suggestion to most people who are planning to sell soon and are considering significant remodeling, is to perform inexpensive cosmetic and deferred maintenance work, and leave the expensive updating to the next owner.
Special Thanks to appraiser extraordinaire Rick Hackney for his insights into the value of a home remodel. You can reach Rick at firstname.lastname@example.org