Home Improvement- Cost vs. Value

Real Estate Agent with EXIT Realty Beatrice Associates 9506757

home improvement and the cost vs value


Whether you are considering adding on or renovating your current home it is exciting to think about some fresh, new living space.  But does a home improvement really make financial sense?

One thing is sure for most homeowners.  At some point, you will be selling your home.  It may be in a few years, or 10 years or more from now.  This can leave one wondering if the home improvement project is worth it.

As a Massachusetts listing agent there is nothing worse than showing up at a listing appointment and tell a seller that their recent….

$75,000 finished basement….

or their $50,000 deck….

or their $80,000 kitchen remodel…

…will not return the money they spent on their home improvement project.  Often, they are angry and try to justify that because they spent the money their house should be worth the money spent.

This is where you need to consider cost vs. value.

Cost vs. Value

When it comes to improving your home, there is not a direct correlation between cost vs. value.

The cost is the money you spent to complete the project on labor, materials, permits etc… 

Value is the amount of value the project adds to the value of your home.

There are almost no home improvement projects or renovations that return 100% of the investment in a resulting sale in the next 5 to 7 years. 

Siding, windows and exterior door replacement are some of the best returns for home improvements yet will only return 70-90% of the cost of installation.  Typical bath and kitchen remodel only return 50% to 70% of the cost.  And this is if you only are doing a moderate project.  But, it can be much worse if you over improve your home.

Talk To Your Agent

If you are considering a big project talk to a local agent.  They can give you an idea of what to expect as far as the project adding value to your home.

By talking to an agent and getting an estimate of the added value it can help you structure a budget and rein in costs so your project stays on track and makes sense.

Over Improvement

Over improvement is a big problem.  Many homeowners will go overboard in their renovations thinking they can get a buyer to pay the full cost of the improvement upon resale.

To avoid over-improving see what is typical and normal for similar homes in your neighborhood. 

Don’t be the best house in the neighborhood.  There is truth to the adage buy the cheapest house in the best neighborhood.  You can always go up from there.  But when you are the best house around there is nowhere else to go you have already peaked.

Often it is better to sell and buy a house that suits your needs rather than remodel or renovate.

Real Life

I recently had a good friend of mine list their home.  Due to their personal preferences, years ago, they built a huge deck with high-quality materials that was 16 feet deep and ran 60 feet along the back of the house.  The project cost them almost $100,000.  They enjoyed the deck and created a lot of memories for 10 years with their magnificent deck.

But when they came to me to list their home, I had to be the bearer of bad news.  We couldn’t tack on the $100,000 to the price of the home because of their beautiful deck. They were very frustrated with me. 

At the time of construction, the cost of their deck was worth about 20-25% of their home's value.  When it came time to sell it was worth what a normal deck was worth, maybe a little bit more. 

A good rule of thumb is to never spend more than 5%, maybe up to 10% of the value of your home on anyone home improvement project.

It just won’t make financial sense when it comes time to sell.  And, even then you still won’t recoup 100% of the cost.

Be Realistic

If I had a dollar for every time a buyer told me this was their forever home, I would be rich!!  Things change in life….. families grow, jobs change, circumstances change, etc… Many of these circumstances lead to having to move. 

When planning your project, be realistic.  Plan your project like you will be selling it in a few years.  This means don’t over-improve, don’t go crazy with highly personalized choices and stay away from short-lived trends.

Of course, if this is truly your forever home and you will be there for 15+ years or more, do what you want.  But any REALTOR will tell you that is hardly the case.

The Value Can Outweigh The Cost

Any home improvement project can certainly have a value past the cost and the actual value it adds to a home.  Consider a basement remodel.  It can add sorely needed living space for your family, like a casual family room, maybe an extra bedroom or even an extra bath.

The value it provides you and your family can certainly outweigh the cost.  It just may not add value to the selling price of the home when the time comes. 

Of course, you will recoup a large percentage of the cost but probably not all of it.


Be smart about your home improvement projects. 

Realize that your project won’t recoup you 100% of the cost of your project on resale.  Do it because it is a personal choice that will enhance your life in your home. 

But don’t fool yourself into thinking it is an “investment”.

Comments (5)

John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Hello Kevin Vitali very good helpful report about home improvement, cost vs. value.

Jul 15, 2021 03:27 PM
Kevin Vitali

Thanks John Pusa 

Jul 20, 2021 04:06 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Great information, thanks for sharing.  I hope you have a great day.

Jul 16, 2021 01:42 AM
Kevin Vitali
EXIT Realty Beatrice Associates - Middleton, MA
Helping Massachusetts Home Buyers and Home Sellers

Thanks Richard Weeks 


Jul 16, 2021 01:12 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

This is valuable information, and something homeowners should consider when it comes to return on their investment with home improvements.

Jul 17, 2021 04:04 AM
Kevin Vitali

Thanks Myrl Jeffcoat 

Jul 20, 2021 04:06 AM
NK Sharma Group
Savitry Greens

When you come to improve your home, it is very stressful and takes a lot of time and money. So I will suggest taking home improvement decisions wisely.

Nov 20, 2021 06:58 AM