Special offer

The myth of recouping reno costs

By
Real Estate Agent with Chase Realty Inc. Brokerage

It used to be that when you renovated some portion of your home, the home's value would increase.

Things aren't quite the same now.

A recent survey by Remodeling Magazine, a periodical for builders, publishes an annual survey of the value of home improvements.

The depressing results include the following examples: An upscale bathroom remodel cost about $51,000 in 2007 but homeowners could expect to recover only about $35,000 or 68% of the cost. Spend $220,000 on a new master bedroom suite, recoup just $141,000 (64%). Drop $109,000 on a new kitchen, make back just $81,000 (74%).

Most remodeling has gone far off the scale of being reasonable, especially if the primary purpose is financial. Custom built kitchen cabinets, granite counters and top-of-the-line restauarnt-style appliances look fantastic, but there are plenty of more modest and affordable alternative. And they will still sell your home if that's the intention.

Don't try to keep up with the neighbours. Unless you are remodelling to put it up for immediate sale, there is no valid financial argument for remodeling just to keep on par with The Jones'. In fact, if you're not moving out anytime soon, save the expensive reno's for when you do plan to sell. Then, at least, they will new. There's nothing worse than viewing a home that was "renovated" only to find the reno's are a decade old. To most buyers, a "renovated home" means a modern home...modern at the time of viewing.

excerpted from "The Wall Street Journal Complete Home Owner's Guidebook" by David Crook

Robert J. Morrow is editor of www.HamiltonHomeReview.com, an online real estate magazine serving Greater Hamilton, Ontario. Click here for a FREE SUBSCRIPTION sent to your email monthly. Click here to receive new Hamilton area listings in your email daily.

Comments (2)

Janice Ankrett
Burlington, ON
Staging Professional

In Staging we believe that you can put 1to3% of the list price into preparing the home for sale. I offer my clients different levels of updating when I do a consult. At the low end is paint, taps, knobs and flooring. On the other end of the scale is a  renovation. Personally I would only do a complete renovation if I had time to enjoy it myself because as your entry shows you may not recoup all your money. By updating an area the buyer will feel that it is livable until they can make the changes they feel are necessary.

Jan 21, 2009 05:00 AM
Al Wright
Affordable Canadian Home Inspections - Hamilton, ON
Have your inspections performed the Wright Way

Remodeling seldom pays you back; Remodeling Magazine's annual cost vs. value report shows that thecost of most remodeling projects are not 100% recouped when the home is sold. As shown in thefollowing table, every time you sink money into these projects, you take money out of your pocket when you sell your home. For instance, adding a bath sends 28% of your investment down the drain. And aswimming pool returns as much value as a hole in the ground.

Project Cost                        Recouped     Your Loss

Adding a bathroom         72%            28%

Remodeling a bathroom  71%            29%

Adding a family room      71%            29%

New kitchen                   70%             30%

Adding a bedroom          65%             35%

Replacing windows          56%             44%

Swimming pool               0%              100%

Dec 02, 2009 06:22 AM