Life in uncertain and you never know if you may end up needing to sell your home sometime down the road, even if you weren’t planning on it. That’s why it’s always important to keep in mind when remodeling, the potential resale value of any investments you make into your home. There are many home remodeling projects that are sure to recoup nearly all of the initial cost at resale while there are many projects that recoup around 60%. Here are some tips for determining which upgrades are worth pursuing and which ones aren’t.
Cost vs. Value Report
Every year Remodeling Magazine releases a cost vs. value report which breaks down various remodeling projects to determine the average cost of those projects and the average value of those same projects at resale. The Cost vs. Value report looks at dozens of remodeling projects and compares cost and value figures from more than a hundred different markets. It’s the best place to start when considering which remodeling projects to undertake.
Mid-range remodels recoup more than up-scale remodels
One thing that is consistent across all markets and remodeling projects is that mid-range remodeling projects are a better value than up-scale remodeling projects. In the kitchen and bathrooms (the two most commonly remodeled rooms) you can expect to recoup about 59 to 60% of the cost for an upscale remodel or 67 to 70% for a mid-range remodel.
Many homeowners think that the more luxurious the remodel the better, but the opposite is usually true. A too-extravagant remodel might make your home the nicest on the block but it also puts the home’s value outside of what people are willing to pay for a home in that neighborhood.
Smaller projects are safer bets than big projects
Even with mid-range remodels, the larger projects still don’t recoup as much of the cost as many homeowners might assume. An ROI of up to 70% for a mid-range kitchen remodel might sound pretty good, but when compared to the ROI for a front door replacement (101%) and the ROI for a garage door replacement (85%) it becomes clear that bigger doesn’t always mean better.
In the Cost vs. Value report, only four of the thirty-six projects cost less than $5,000. Of those four, three made it into the top five for ROI. For projects costing more than $25,000, not one of them made it into the top ten for ROI.
Geography can play a big role when it comes to ROI on remodeling projects. In San Francisco, for instance, the average ROI for any remodeling project was 103% which means you can’t go wrong if you want to remodel in that particular area. When deciding on remodeling projects, it’s a good idea to speak with realtors and remodelers who are familiar with trends in your region.
So before you spend your Christmas bonus or tax return gutting your kitchen and starting over from scratch, you may want to consider new baseboard heater covers for your baseboard radiator system or a new garage door.
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