Tips for Great ROI
by Wendy Tanson
According to the National Association of Home Builders, homeowners will spend nearly $450 billion this year on remodeling. And why not? Adding new amenities and functionality to your home not only provides great enjoyment and a sense of satisfaction, but may increase the value of your home, too.
If you’re thinking of remodeling with an eye toward resale, four projects have consistently provided a high return on investment: upgrading kitchens, bathrooms, replacing siding, and new windows. Remodeling and Realtor Magazine’s Cost vs. Value Report notes that a mid- to high-end siding replacement (with fiber cement or quality vinyl) is the least expensive, but most lucrative way to increase the selling price for many homes. In fact, in the South Atlantic region, replacing siding with fiber cement returns almost 81% of its cost, and replacing with foam backed vinyl returns about 76%. Replacing windows brings high returns as well, allowing area homeowners to pocket 73% of their spending at resale. These numbers underscore the fact that curb appeal is king and well worth the investment.
If you don’t have a deck, adding one is compelling. At an average cost of $12,714, a deck addition returned 77% of its cost at resale. Adding stone veneer also paid off handsomely, with an $8,800 average cost and 94% return, the very highest of the report.
Kitchen and bathroom upgrades offer strong returns, too. A minor kitchen remodel—about $22,000 in improvements—let homeowners pocket 76% of the cost when they sell. Interestingly, major kitchen remodeling—averaging $65,000—actually provided a lower return on investment than its more modest counterpart, with area homeowners capturing 59% of their investment.
Thinking of remodeling your bathrooms? A mid-range update—about $19,700—returned 67% of the cost to homeowners, while a major upgrade, estimated at $63,000, captured about 59%. As with kitchen remodeling, spending more now doesn’t necessarily translate into a higher percentage return later.
If you have an unfinished basement or attic, your return potential is tops: Turning this raw square footage into finished living space provides the greatest return, dollar for dollar, of all projects reviewed. Finishing an attic puts 90 cents of every dollar back in your pocket, and finishing that basement returns 91 cents to you. Great investments both.
Remodeling projects found to have the lowest relative return in this area include adding a “grand entrance” foyer, with a 53% return, and adding an upscale owner’s suite, with a 53% return.
If remodeling is indeed in your future, and you’re looking to get your money back when you sell, here are some pointers to consider:
- Avoid designs that are avant garde or unusual. Room plans and materials that are highly customized may shrink the pool of potential buyers who are interested in your home.
- Consider the standard in your neighborhood. If you’ve got the only kitchen on the block with avocado appliances, it may be time to renovate.
Alternatively, if your home’s value is already at the peak of your community, consider tempering your investment to avoid pricing yourself out of the neighborhood.
- Make spaces flexible. A well-designed fourth bedroom may be an attractive office, workout room, or play space for a potential buyer.
- Consider the rest of the house. If you undertake a major remodel, the look and feel should blend with the other spaces in your home.
Tremendous satisfaction and enjoyment can come from remodeling your home, in efforts both large and small. The money you recoup when you sell may not be of import to you, or may just be a small part of the equation. But if increasing your home’s value is among the primary reasons for your remodeling efforts, the above projects and guidelines have been evaluated as best bets to recapture the dollars you spend.
Wendy Tanson is a Broker with Nest Realty Raleigh-Durham-Chapel Hill. To learn more about Wendy, visit her agent page.