Remodeling that Pays Off
Let’s start by observing that the phrase “pays off” can have various meanings. To some people, the issue is purely financial: will my remodeling expenditures be recouped? For others, recognizing that measuring financial return can be difficult, the issue is whether remodeling efforts cause a house to sell more quickly (or in some cases, at all). In other words, the financial benefit of remodeling may be real, but indirect.
Some remodeling efforts may be entirely visible like new kitchen cabinets, flooring and countertops, while others like renovated plumbing may be less visible yet still important to potential buyers. Depending on the individual home and the market in which it resides, different sellers may opt for different remodeling strategies. There is no one-size-fits-all solution, but a skilled, experienced real estate agent can help you determine which remodeling investments are likely to work out best in your specific area.
It’s important to understand and remember at the outset is that in most situations, you may not recover all of the money that you’re likely to spend on a renovation project when it comes time to sell your home, even those efforts that raise the overall value of your home.
The No. 1 way to realize a significant payoff for your remodeling project is to repair any or all of the known problems with your house, such as a leaky roof or archaic plumbing. Depending on the specific repair or repairs, you could actually improve the value of your home and recover most if not all or more of the money spent on the repair(s).
In its annual Cost vs. Value Report for 2011-2012, Remodeling Magazine listed attic bedroom renovation projects as the one with the best chance of paying off. The site shows that in 2012, the average project cost for these jobs in the Washington, D.C., area was $44,843; and the average resale value was $36,148, giving you an 80.6 percent cost recuperation.
Kitchen remodeling projects also tend to pay off on a more regular basis than most others do, even though new appliances, cabinets, countertops, and flooring are unquestionably expensive. Once again, we turn to the good people at Remodeling magazine to take care of the number crunching for us. And they say that the cost recouped on major kitchen remodeling projects over the past year averaged more than 70 percent. Like in the attic bedroom project described above, they recorded the average job cost as $54,426, with an average resale value coming in at $38,709.
The good news is that, while you may not recover all of your remodeling expenditures in strictly financial terms, it’s important to consider the impact that remodeling may have when it comes time to sell your home. If you imagine two comparable homes – one boasting significant remodeling and one which is begging to updated – the renovated home will nearly always sell first. Unless you can afford to have your home sitting on the market for a long time, it pays to remodel and to see your home move more quickly.
