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Does it Pay to Renovate?

By
Industry Observer

KitchenThat's what everybody wants to know. If you redo your kitchen, or add a deck, will it pay off when you sell the house some day? Will the investment get you more attention and money?

I've though like this lately as I went through the process of renovating my blog with a new look and feel. In fact, it was a lot like renovating a kitchen. First I had to decide what I wanted it to look like when it was finished. Then there was the time when I was still "living" in my old blog format and keeping that up while working to construct a new look. Finally, the day came when the new version was complete and the old blog look faded into memory. As for that first question - will there be more attention? - that is still being answered.

It's hard to know if a blog redo will pay off, but it's not hard to get an idea about whether making big changes in your home will pay off. Each year, RemodelingOnline publishes a Cost vs. Value Report. They review the cost of 25 different remodeling projects and then combine that with data collected from more than two thousand REALTORS® on resale values. The results are in chart form - one for the country as a whole, and one for each of nine regions of the United States.

BathroomOf course, when you decide whether to renovate, money is not the only issue. Maybe you need more space, and the decision is between adding on and moving. Or perhaps you are simply tired of that black and white bathroom tile. Whatever the reason, eventually cost is an issue. That's when it helps to have an idea of whether you'll make most of your investment back when you sell.

Nationwide, the projects that return the most at sale are kitchen remodeling - either minor or major - and bathroom remodeling. When you look at the chart by region, though, you see differences. In the Mountain Region, basement remodeling returned about 86% of the investment, about the same as a bathroom remodel or minor kitchen remodel. But if you're deciding between building an addition, and moving, it could help to know that the best return was for a two-story addition, recovering more than 88% of the cost.

Of course, you need to use your own good sense before starting any home improvement project. Ask for recommendations from friends and family for reputable and quality contractors they have used. Be sure to get everything in writing, including verification of insurance, and read the contract carefully including all that tiny print on the back.

Whatever your renovation plans, remember that the return on investment is not only measured in dollars. Factor in the convenience, comfort, and enjoyment you and your family will have for as long as you live in your home.

Show All Comments Sort:
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

I actually contribute for that report and I somewhat have a problem with it.  Remodeler Magazine is a trade journal for, you guessed it, remodelers.  As such the different remodeling projects that they analysis are done such with the idea of a remodeling company doing the work.  I'm cool with this, but think that it skews the results to make the remodeling more expensive than it could be.

I flip about 2 or 3 houses a year and have a almost journeyman carpenter who does a lot of my work for me.  I pay him an hourly rate and buy my own materials.  Generally speaking, I can redo an entire house on what Remodeling spends on a kitchen.  

I'm not knocking the contractors here because there is a certain amount of security going with a retail remodeling contractor who comes with recommendations,  but it's not totally necessary all the time.

 

Bob Mitchell

ValueList 

May 08, 2007 02:33 AM
Denise Dreyer
Ramagli GMAC - Yardley, PA
Renovating pays off very well. The first thing people tend to look at is the kitchen and the bathroom. The living room rarely gets much attention, oddly enough...since most people don't use their kitchens anymore (joke). We've all learned from our Real Estate books that the value of your home is increased by a number of factors...one being renovations, one being the value of the property surrounding your home, the community it is in, etc. I've noticed from others (not myself, I'm still in school) that you can sell more homes with a new, shiny kitchen than any other upgrade in a home. 
May 08, 2007 02:34 AM
David Phillips
Solid Source Realty - Marietta, GA
I renovate properties on a fairly large scale (1-4 a month).  The kitchen always gets our attention.  I would pass to homeowners that one of the best upgrades to your home is adding a granite countertop.  The cabinets and bases being of suitable quality, adding the granite countertop to your home will provide an upgrade that you get to enjoy DURING your ownership without fear of depreciation.  While I can't promise that you will get a 100% return on investment, the satisfaction of having something other than laminate makes for a more pleasant home ownership.  It is also an attention grabber when it comes time to sell.
May 08, 2007 08:58 AM