Know which remodeling projects pay off
Photo by Annie Gray on Unsplash
Are you planning to spruce up your home? Whether you’re getting ready to sell your house or you’re just tired of having a dated kitchen or bathroom, it’s important to make smart, cost-effective choices when you renovate.
If you expect to stay put for a while, even a minor remodeling project can enhance your enjoyment of the space.
And if you plan to put your house on the market soon, you can give it a competitive edge by painting, updating lighting fixtures and appliances, or even refreshing a bathroom or two before listing it.
Tips for sellers
If you’re making upgrades in anticipation of putting your home up for sale, do your research first to make sure it’s money well spent.
After all, not all fix-it projects yield the same return on investment. Why plunk money down on a project that won’t provide a reasonable return when you sell?
“If you have a house that looks old or worn, your potential buyers will discount their offer by their estimate of what it will take to bring it up to par,” said Mari Adam, a certified financial planner in Boca Raton, Florida.
“But while it’s great to make your house look fresher and up to date, you don’t want to over-improve it or do idiosyncratic projects that won’t appeal to a potential buyer.”
Consult an agent. One way to help get the most value for your remodeling buck is to consult an experienced local real estate agent.
A local agent understands the market, knows what’s selling and what’s not, and is familiar with the homes that will compete against yours. He or she knows what it will take to present your home in the best possible light and can make suggestions of projects to improve its marketability.
In tight markets, where there is limited inventory and buyers still compete for available homes, it may not be necessary to make any improvements because buyers will snap up anything that becomes available. A local agent knows this and can be of tremendous value to sellers.
Get the data. Another valuable resource is the annual Cost vs. Value (CVV) report from Zonda, a housing data and consultancy firm. This report analyzes 23 common home-renovation projects to determine how much value those projects retain at resale.
Results of the CVV report are often surprising. For example, many homeowners believe that a kitchen or bath remodel will provide the most return on their investment.
But the 2024 CVV report, released in April 2024 and based on 2023 data, found that a garage door replacement was the top-performing project. With an average cost of $4,513 and an $8,751 resale value, a homeowner completing that project will recoup a whopping 194% of the cost.
The second- and third-ranked remodeling projects on the 2024 list were a steel entry-door replacement and installation of manufactured stone veneer, which returned 188% and 153% of their cost, respectively.
Focus on curb appeal. It’s no coincidence that all three of the top-performing projects this year are exterior projects that help to improve a home’s curb appeal.
“A buyer’s first impression of a house is super strong,” said Clay DeKorne, chief editor of Zonda’s JLC group. “When buyers drive up to a house that looks really shabby on the exterior, they form an impression that directly affects how much they want to pay for it.
“The interior may be wonderful, but they have to overcome the impressions they form about the outside.”
Curb appeal is an example of the old adage, “You don’t get a second chance to make a first impression.”
Prospective buyers assume that if a house is well maintained, with an updated exterior, fresh paint, flowers and manicured landscaping, that the owner has been equally attentive to routine maintenance of the rest of the house, DeKorne said.
The CVV also indicates which home-improvement projects don’t deliver value. An upscale bathroom addition, for example — a project with an average cost of $107,477 — returns just 32.6% of that cost at sale. And an upscale primary suite addition, with an average cost of $339,513, has a return of just 23.9%.
That’s why home sellers need to carefully assess their planned projects to make sure they don’t spend money they won’t get back on the sale of their homes.
The full Cost vs. Value report breaks down the average cost and resale value for projects by region as well as nationwide.
If you plan to stay a while
Even if you’re not planning to sell your house soon, the CVV report can help guide you if you’re on a budget. Many of the projects with the highest return on investment are also among the ones with the lowest costs.
And because you don’t have to worry about making renovations that appeal to a wide range of potential home buyers, you can choose upgrades that suit your tastes.
“People love to renovate their kitchens and bathrooms because that’s when they can put their mark on a house,” DeKorne said. “All of the selections — the countertops, flooring, cabinets, fixtures — are personal, and the value you get is the enjoyment of living in the space you created.”
You can spend tens of thousands of dollars to create a kitchen you love, a place where you’ll spend countless hours dining, entertaining or socializing with friends and family.
But if the buyer of your house doesn’t like the ornate cherry cabinets you selected and prefers a bright white kitchen, then that kitchen will have no value to the buyer.
Homeowners planning to stay for a while should feel free to personalize their space, choosing designs and finishes that make their house a home, rather than keeping it neutral in an attempt to appeal to a broader audience of potential home buyers.
Do what makes you happy. Debby Belt, a senior associate at Hammond Residential Real Estate in Chestnut Hill, Massachusetts, said clients often ask her whether a certain renovation is worthwhile.
“When I’m asked that question, the number one thing I say is, ‘Will you enjoy it?’” she said. “You can’t think of the future because, by the time you sell your house, the styles might be different.”
Below are four remodeling projects among the top 10 from the CVV report that recoup the highest percentage of their cost at resale.
We chose them not only because they are decent investments, but also because they can make your living space more enjoyable if you plan to stick around for a while.
Or, in the case of putting energy-efficient appliances in your kitchen or adding new siding, the projects can reduce energy use and save you some money on utility bills in the long run.
Plus, all these renovations have an average cost of less than $30,000, and some may run considerably less, allowing you to rejuvenate your home without breaking the bank.
Give your kitchen a facelift. A minor kitchen remodel is one of only two interior projects that are among the CVV report’s top 10 performers (the other is a mid-range bath remodel; see below). The kitchen remodel costs an average of $27,492, with a resale value of $26,406, and 96.1% of the cost recouped.
Upgrade to fiber-cement siding. Replacing existing siding with new fiber-cement siding has an average job cost of $20,619, a resale value of $18,230, and a return on investment of 88.4%.
Fiber-cement siding, while more expensive than vinyl, is durable and long-lasting, and it performs better in moist environments, according to Elizabeth Gomez, co-owner of Bridge City Contracting in Battle Ground, Washington.
The most important component of the installation process, which takes about three to five days for a 1,250-square-foot siding job, is the wrap that goes under the siding, because it weatherizes the house and protects it from moisture issues such as dry rot and black mold, she said.
If your existing siding is in good shape and you’re primarily interested in boosting curb appeal, one way to re-side a house cost-effectively is to do only the front.
That’s what Danielle Kilian did in 2021, when she installed fiber-cement siding on the front of her 1,546-square-foot home in Vancouver, Washington, at a total cost of about $13,000, including painting and a new front door.
“The rest of the siding was in good-enough condition, and we did the front to update the look of the house,” said Kilian, events director for the Building Industry Association of Clark County.
“The front is what is seen by neighbors and by ourselves when we come home. So that was the most important piece for us, and we were able to do it in an affordable way.”
Build a deck. The addition of a wood deck has an average cost of $17,615, a resale value of $14,596, and a return of 82.9%.
The construction of a 16-by-20-foot wood deck takes less than a week, according to Michael Ebner, owner of Back to Nature Decks in Oreland, Pennsylvania. Once the deck is completed, he recommends sealing it (and re-sealing every year or two to preserve it).
Ebner notes that about 80% of his clients opt for a composite deck instead of wood. The price is higher than wood — an average $24,206 for a 16-by-20-foot deck with similar specifications — but composite will last longer, Ebner said.
It’s good for 20 to 30 years with no maintenance. So, if you’re planning to stay in your house for more than 10 years, he said the composite is “a no-brainer.”
One tip Ebner has for homeowners who want a deck is to go big. “A 16-by-20-foot deck is decent, but with all the amenities people have now — grills and furniture and a fire pit — think about extending the budget a bit to make it bigger. You will always fill it.”
The incremental price of building a slightly larger deck is not substantial, he said, adding about $40 to $45 per square foot to the cost.
Update a bathroom. Renovating a bathroom can add tremendous value to a home. A mid-range bathroom remodel comes with an average job cost of $25,251, a resale value of $18,613, and a return on investment of 73.7%.
Bardin said that what starts as a simple bathroom remodel may end up being more comprehensive if the plumbing or electrical systems need to be updated as well.
He said such a project typically takes about eight weeks because multiple subcontractors are involved and, in his jurisdiction, seven inspections are needed along the way.
Bardin has two tips for homeowners planning a bathroom remodel. First, for the sink, he recommends a single-hole faucet, not the type with a spout and two handles. He said the single position has fewer problems, lasts longer and is easier to clean.
Second, if a tub/shower is being installed, he said it’s critical that it be no deeper than 14 inches because it’s challenging for a homeowner or guest to step over anything higher, especially with wet feet.
He suggests that anyone who wants a soaking tub install it in the primary bath, not a secondary bath that children and guests will be using.
Ed. Note: The Baltimore County Age-Friendly Upgrades for Seniors (BCAUSE) program provides up to $4,500 in free home repairs and accessibility modifications for Baltimore County residents 65 and older. Contact the county Department of Aging’s Maryland Access Point office at (410) 887-2594.
In addition, the Housing Upgrades to Benefit Seniors (HUBS) program offers grants and loans to help Baltimore residents make home improvements that increase safety and security. Call the HUBS Hotline at (443) 470-9871.
Note: This article first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money, and keep more of the money you make.
All contents copyright 2024 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.
