Home Remodeling Projects Return on Investment- By The Numbers

Wondering what  the latest and greatest in remodeling and renovation trends are? You've seen some of them on television and the web, magazines and friend's houses. It seems there isn't any place in a house where we haven’t seen a major improvement, expansion or update projects.

As Fairfield County Home inspectors, our feeling is that if a homeowner is planning to remain in their home for years to come, it’s ok to consider projects that genuinely suit their needs with less focus on pay-back. For example, a custom kitchen, a fabulous master suite, a new home office --  whatever it is they will truly use and enjoy. Our Realtor friends usually add the good advice that if the plan is to sell the home in the not-too-distant future, homeowners should focus on projects that will have the best chance of getting the highest return on their investment.

So, let's take a look at the three rooms that rise to the top of the ROI (return on investment) list for common home improvement projects:

The Kitchen 

Average ROI = 83% (minor remodel) vs. 78.1% (major remodel)* 

Even within a particular room, project costs can vary widely depending on the extent of the improvements.  A major kitchen remodel with high-end custom cabinetry, expensive surfaces, commercial quality appliances, and engaging a designer may cost upwards of $100,000, and on average, will get a return on investment of about 78%.  That's a great return, particularly if you're a gourmet cook and intend to stay and enjoy the improvements awhile.

However, a minor kitchen "facelift" averages a better ROI in percentage terms, and costs far less. If the layout works well and looks good, and you intend to sell the home, why go crazy with the budget? A more-modest project might entail cabinet refinishing or re-facing, replacement countertops and flooring, and swapping out dated appliances for new.  It would not include restaurant quality, top-of-the-line, expensive appliances such as a $10,000 refrigerator or range, but it would include quality, mid-range appliances that will improve the room's appearance and help it sell faster. Stick with stainless and white which are by far and away the most popular.

Bathrooms

Average ROI = 78.3%*

Bathroom remodels consistently rank at or near the top in terms of return on investment. Whether it's a powder room or a master bath, beautiful, updated surfaces, water-saving fixtures, and neutral tones are the minimal improvements that should be considered. Taking another step up, enlarging the room itself and adding luxurious "spa" elements such as a deep soaking tub, heated floors, and a double shower will obviously increase the budget and, likely, the appeal of a master bath.

All Rooms - Window Replacements

 Average ROI = 81.2% (wood), 79.3% (vinyl)*

 

Replacing windows may not rank high on the glamour scale, but buyers appreciate the improved appearance, energy efficiency / comfort and ease-of-use of new windows.  The ROI shows that they are willing to pay for them. Look for thermopane, low-E coated windows with a minimum 10 year, fully transferable warranty and a U-factor of 0.35 or less. Low-E coating reflects heat back into a room in winter and away in the summer, and U-factor is a measure of heat loss through a window.  Framing "pocket" insulation and installer choice are other critical factors.  Low-end economy windows installed by a low cost contractor will yield zero to negative savings over the window life, and may actually detract from the appearance of the home. As we constantly advise our buyers, obtain and check references!

 

A couple of final thoughts to keep in mind:

Always aim for universal appeal. You don't have to be boring, but avoid highly unusual designs and patterns, strong colors, and unique custom components that can be polarizing to potential buyers. Remodeled spaces should look great to the widest possible audience, and if you intend to stay awhile, they will continue to look fresh in the future, as opposed to a dated or trendy.  Remember, you’re not looking for bold – you’re looking for sold.

It bears repeating: be careful not to over-improve a starter home, or any home for that matter. Walk around the block and get a feel for actual improvements in the area – not what you wish it was. Homeowners should be careful to keep upgrades and improvements within their original, pre-planned budget and the range of similar homes in their neighborhood. We've all heard the adage, "Don't go to the supermarket hungry."  It's the same for home improvement - stick to your original budget and don't allow yourself to be swayed by pushy salespeople.  The most expensive home in the area, however attractive, is rarely the easiest to sell.

For a FULL list of improvements and ROI's specifically for Fairfield County Connecticut that was just updated in 2014, click here

Article courtesy of David R. Leopold, ACI

 David Leopold
146 Coleman Road
Fairfield, CT 06825
tel: 888-801-7111
fax: 203-374-4564
David.Leopold@pillartopost.com

www.pillartopost.com

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