Homeowners remodel for a slew of reasons, including the ever popular “return on investment.” If your clients have matters of money and moving in mind, your level of knowledge on which remodel projects will result in the greatest ROI can help your customers sell their home quickly and get their cash investment back.
Remodeling Cost vs. Value
“Remodeling” magazine generates an annual “Cost vs. Value Report” to give consumers information on the cost of various remodeling projects and how it can affect the value of their home when it is sold within one year of project completion. A general rule of thumb is that a kitchen renovation is one of the best projects to invest in order to recoup a cash investment at the time of sale. But what is involved in a kitchen renovation and just how much of the costs can homeowners expect to recoup?
Minor Kitchen Remodel – Mid Range
“Remodeling” defines a mid-range, minor kitchen remodel as:
In a functional but dated 200-square-foot kitchen with 30 linear feet of cabinetry and countertops, leave cabinet boxes in place but replace fronts with new shaker-style wood panels and drawer fronts, including new hardware. Replace combination cooktop/oven range and slide-in refrigerator with new energy-efficient models. Replace laminate countertops; install mid-priced sink and faucet. Repaint trim, add wall covering, and remove and replace resilient flooring.
According to “Remodeling’s 2017 Cost vs. Value Report,” the national average job for a minor kitchen remodel is $20,830, with a resale value of $16,699; resulting in 80.2% costs recouped.
Major Kitchen Remodel – Mid Range
“Remodeling” defines a mid-range major kitchen remodel as:
Update an outmoded 200-square-foot kitchen with a functional layout of 30 linear feet of semi-custom wood cabinets, including a 3-by-5-foot island; laminate countertops; and standard double-tub stainless-steel sink with standard single-lever faucet. Include energy-efficient range, ventilation system, built-in microwave, dishwasher, garbage disposal, and custom lighting. Add new resilient flooring. Finish with painted walls, trim, and ceiling.
According to “Remodeling’s 2017 Cost vs. Value Report,” the national average job for a Minor Kitchen Remodel is $62,158 with a resale value of $40,560; resulting in 65.3% costs recouped.
Major Kitchen Remodel – Upscale
“Remodeling” defines an upscale, major kitchen remodel as:
Update outmoded 200-square-foot kitchen with 30 linear feet of top-of-the-line custom white cabinets with built-in sliding shelves and other interior accessories. Include stone countertops with imported ceramic – or glass – tile backsplash; built-in refrigerator, commercial grade cooktop and vent hood; wall oven; and built-in combination microwave unit. Install high-end undermount sink with designer faucets and water filtration system. Add new general and task lighting including low-voltage under cabinet lights. Install tile or similar flooring that looks like wood.
According to “Remodeling’s 2017 Cost vs. Value Report,” the national average job for a Minor Kitchen Remodel is $122,991 with a resale value of $76,149; resulting in 61.9% costs recouped.
We can draw a lot of conclusions from this data, one of the most noteworthy is that a minor kitchen remodel is one of the best investments a homeowner can make when concerning return on investment. In the last 5 years, the minor kitchen remodel has seen percentage increases in value, rising 8.1% in value of costs recouped between 2012 and 2017. As the real estate market continues to improve, so do the returns on home improvements.
Return on Investment Don’ts
Don’t: Remodel Yourself out of the Neighborhood
Just as it isn’t the best investment strategy to purchase the most expensive home on the block, it also isn’t advisable to remodel a home into being the most expensive home in the neighborhood. Zillow states that it is a worthwhile strategy to purchase one of the cheaper homes in a neighborhood and improve it into working condition, “Just don’t get carried away and turn the worst house on the block into the biggest and most expensive one.” Your customers should compare their home to others locally to ensure you aren’t pricing their home too far above or below the neighborhood. Homeowners who have learned this lesson realize that homes are typically appraised in comparison to similar homes in their neighborhood. The most expensive home on the block will be compared to lesser homes in the area, and the owners will likely receive a property appraisal that will be much than it is worth.
Don’t: Over Personalize
Getting too personal is yet another remodeling no-no when your clients plan to sell their home within the foreseeable future. You may want to warn them that bright wall-to-wall carpeting might seem like a good idea now but many potential homebuyers are deterred by carpeting in the wrong space or paint in the wrong color. Potential homebuyers want a house that is move-in ready, and to some that means carpeting and paint they don’t need to change right away. Not only are many prospective homebuyers deterred by the thought of painting an entire home and ripping out carpet upon moving in, they will find it much easier to imagine themselves in your client’s space if they have neutralized the decor and removed traces of their personality.
Are you ready to help give your customer’s homes the boost they need to sell quick and at their desired price or make remodeling changes that will result a high cost recoup in the future? Remodeling for resale can be a tricky endeavor to take on and it requires a great deal of research but your professional expertise can help your clients choose which investments are worthwhile.
© 2017 Hanley Wood, LLC. Complete data from the Remodeling 2017 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.