Which Home Remodeling Projects Pay Off

When you are considering starting a remodeling project one of the things that you may want to consider is which ones will pay off, and which ones are really not worth the money. A recent Remodeling 2014 Cost vs. Value Report (www.costvsvalue.com) provided a great interactive map detailing the Cost vs Value analysis for some of the most common projects by geographic area.
Home Kitchen Remodel
The analysis comprises of 35 different projects, ranging from adding an addition story to replacing a garage door. The projects are also split into mid-range to upscale projects. For example, a mid-range siding replacement refers to a vinyl replacement material while the upscale siding replacement refers to a fiber cement material.

According to the report the mid-range Salt Lake City UT project that returns the most is replacing the garage door (this is also the cheapest). The average job cost for this project is $1,426, and the cost recouped is 93%. The project that provides the poorest return is a home office remodel which while costing $26,107, only returns 31.1% of the investment. *

When we look at upscale Salt Lake City UT remodeling projects replacing the siding with fiber cement costs $12,047 and typically returns 91.3% of the investment. But if you remodel a bathroom ($48,678) you can typically only expect to get 51.9% of your money back when you sell. *

As you can see from the above examples from an investment point of view none of the remodeling projects return more than the cost, so does this mean that all remodeling projects waste of time? Of course not, in some cases remodeling makes perfect sense.
For example, if your kitchen is really dated and run down it may make perfect sense to replace/update it before you sell. This is for a number of reasons:

1. In order to make your home more attractive to buyers you may have to list your home below other comparable listings (those with updated kitchens) in your area.

2. Most buyers want to move into a home where they don’t have to do any work. So even with a lower listing price, buyers may well be put off by the thought of having to renovate the kitchen.

3. You may receive lower offers based on the fact that the buyer needs to budget for a new kitchen. So even though you are listing for less than other homes, because the kitchen needs to be remodeled, buyers may still think that they can low ball an offer.

There are some things you need to avoid when you are considering a remodel. One of these is over renovating/under renovating for the size/price of the home. For example, if your home is worth $150,000, it makes no financial sense at all to spend $70,000 on a top of the line kitchen remodel. On the other hand if you home is worth $700,000 you don’t want a $5,000 kitchen.

So the thing to take away from this analysis is that when you are considering a remodeling project, don’t expect to make a financial gain on your investment when it comes time to sell your home.

* ©2014 Hanley Wood LLC. Complete data from the Remodeling 2014 Cost vs Value Report can be downloaded free from www.costvsvalue.com

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