Special offer

Remodeling by the Numbers

By
Real Estate Agent

Deck

So you’ve decided to hunker down for the winter, and you’re only going outside for work, groceries and trips to your favorite hardware store. That’s right – you’ve decided, “To heck with trying to sell our house right now. Let’s fix it up and sell it when the market is better.”

Your wife wants new appliances or a master bath suite that rivals that of a room at the ‘W’. Your kids want you to tear out the crab grass, lay down sod and put up a big toy that the school district will want to lease time on. And you, bless your heart, want to try and make some money on the home with the projects you’re about to undertake. The wife and kids I can’t help you with, but knowing what to do with your equity is something that I can help with.

Now before I get too far into telling you what to do, I need to tell you that I’m not telling you what to do. What I’m about to tell you comes from data that was compiled by one company, estimated by another, and the data itself – derived from Realtors – not a group of people necessarily know for keeping track of how clients find them, let alone the intricate details of cost to value comparisons for remodeled homes.

The first thing I’ll tell you is that we may be able to consider ourselves very fortunate on the west coast when it comes to recouping the costs of our remodeling projects. According to RemodelingOnline’s, 2007 Cost vs. Value Report, the Pacific region is the only region that can say that doing something – at least the right something – can add value to your home when you sell it. All other regions in the US are not currently realizing the value of updating or upgrading their home. So what are the home improvement projects that may – and I stress may – have a positive net effect?

Deck Addition

Adding a 16-by-20-foot deck using pressure-treated joists, posts, and deck boards including a built-in bench and planter with a complete railing system can return your investment to the tune of 108%.

Minor Kitchen Remodel

The report describes a minor kitchen remodel as such. In a functional but dated 200-square-foot kitchen with 30 linear feet of cabinetry and countertops, leave cabinet boxes in place but replace fronts with new raised-panel wood doors and drawers, including new hardware. Replace wall oven and cooktop with new energy-efficient models. Replace laminate countertops; install mid-priced sink and faucet. Repaint trim, add wall covering, and remove and replace resilient flooring. If done well, you may be able to see a return of over 103%.

Window Replacement

If you were to replace 10 existing 3-by-5-foot double-hung windows with insulated wood replacement windows, exterior clad in vinyl or aluminum and wrap existing exterior trim as required to match, making sure not to disturb existing interior trim, you could see a return of almost 103%. Notable – buying the more expensive low-E windows hardly made a difference in your return.

Replace Siding

Replacing roughly 1,250 square feet of existing siding with new fiber-cement siding – not vinyl or wood siding – factory primed and factory painted, including all 4/4 and 5/4 trim using either fiber-cement boards or cellular PVC can return almost 101%.

All other home remodeling projects returned less than 100%. Just because they didn’t, doesn’t mean you shouldn’t take them on. If your home is in desperate need of updating, doing so will only improve your home’s salability, which counts for a lot, even if you can’t count the money.

Allen C. Wright
RealtyU - Aliso Viejo, CA
NS, AHS, REPS
Home improvements are intended to improve the enjoyment from the home, not just pay for themselves.  One of the major reasons we are in this mess is the view that real estate is investment first home second ... it is to be the other way around.
Dec 07, 2007 02:03 AM
Jason Mook
Puyallup, WA

Hey Allen -

I do agree with you, home improvements do improve the enjoyment of your home. I think I'll leave intent up to the individual homeowner though.

And I can't agree that a "major reason" for the mess that's been made of the housing market is because people were thinking of their home as an investment before shelter. It has to do with greed - greed of buyers and sellers, greed of LO's, greed of agents, greed of securities investors.

Ask any seller in any market if they prefer to get top dollar for their home, or if they hope that a buyer finds their home warm and comfy. Your answer lies within.

When a client comes to you and tells you that they're going to sell their home with you in the next six months and asks you what they need to do to update their home, do you tell them to buy new furniture that they're going to take with them when they move, or do you counsel them about the projects that will make the most impact with buyers?

I understand where you're coming from, but I just don't think that's it. To blame our market woes on sellers and agents trying to get the most equity they can from their home is too distilled.

Dec 07, 2007 02:24 AM