It’s a question practically every seller I meet asks me. And it usually comes right after they ask me to list their home. As you can imagine, the answer depends on many different factors.
In this blog, we’ll take a look at the results of the National Association Of Realtors “2017 Remodeling Impact Report”. The report compiled results of several surveys: consumers who had completed remodeling projects; NARI’s (National Association Of Remodeling Industry) project cost survey; and the NAR’s (National Association Of Realtors) survey regarding buyer appeal, estimated project recovery costs, and expected resale estimates.
Let me clear up some some assumptions regarding costs since I’m sure you all will have questions as to how these costs were calculated. First all, project costs are influenced by project design, quality of materials, location, home condition and age, and homeowner preferences. So of course, your costs will vary accordingly. Secondly, we’ll make some assumptions about the “typical” home for these cost estimates, namely: the home is in good condition and there are no surprises; size of home = 2450 square feet; and the home was built post-1978.
WHAT RESOURCES DO YOU HAVE?
I could have easily asked, “How much money do you have?”. In this case, it’s not all about the money but money does play a major role. Can you do the work yourself? Do you have the time to do the work yourself? Do you have a REALLY good friend or family member that can help you out? Does someone owe you a favor, or two?
According to the report, 32% of homeowners completed the work themselves, 32% hired professionals, 21% hired labor but purchased the materials themselves, and finally, 14% did some of the work.
WHAT ARE YOU LOOKING TO ACCOMPLISH?
The report examined pre-sale interior AND exterior projects across 3 dimensions: potential buyer appeal, expected resale value, and recovered project costs. So, are you most interested in what the next owner would want? Or, how much more you can sell your home for? OR lastly, how much of the costs you could recover when you sell?
Once you decide, let’s add a fourth question…would you like to enjoy the project for a period of time before you sell?
And here’s where money plays a major role, especially when it comes to INTERIOR projects. As you can imagine, the interior projects with the highest buyer appeal and highest resale value were also a few of the more expensive projects. Starting with highest buyer appeal:
1. Complete kitchen remodel: cost = $65K, amount recovered = $40K (62%)
2. Kitchen upgrade: cost =$35,000, amount recovered = $20K (57%)
3. Bathroom renovation: cost = $30,000, amount recovered = $15K (50%)
There were 3 projects that were more expensive but had less buyer appeal:
new owner’s suite: cost = $125K, amount recovered = $65K (52%)
attic conversion: cost = $75K, amount recovered = $40K (53%)
new bathroom addition: cost = $59K, amount recovered = $29,750 (50%)
I know what you’re thinking. What’s the difference between remodel and renovate? Well, I actually had to look outside the report for those definitions and their meanings are pretty much consistent with what I would have thought.
renovate = to restore to a good state of repair; to update or upgrade.
remodel = change structure or form of something; tranforming.
Now, what if you were interested in recovering as much of your interior project costs as possible? The highest return on your investment from highest to lowest:
1. hardwood floor refinishing: cost = $3K, amount recovered = $3K (100%)
2. new wood flooring: cost = $5.5K, amount recovered = $5K (91%)
3. insulation upgrade: cost = $2.1K, amount recovered = $1.6K (76%)
Interestingly enough, the exterior project that scored highest across all 3 dimensions: potential buyer appeal, expected resale value, and recovered project cost was not one of the most expensive exterior projects – new roof. In order from highest buyer appeal:
1. new roof: cost = $7.5K, amount recovered = $8,150 (109%)
2. new vinyl windows: cost = $18,975, amount recovered = $15K (79%)
3. new garage door: cost = $2.3K, amount recovered = $2K (87%)
The remaining exterior projects highlighted in the report, again from highest to lowest buyer appeal: 4. new vinyl siding: cost = $13,350, amount recovered = $10K (75%)
5. new steel front door: cost = $2K, amount recovered = $1.5K (75%)
6. new wood windows: cost = $35K, amount recovered = $20K (57%)
7. new fiberglass front door: cost = $2.7K, amount recovered = $1.8K (67%)
8. new fiber-cement siding: cost = $18K, amount recovered = $15K (83%)
As you can see, there are many factors to consider when deciding upon pre-sale projects. From the amount of resources the homeowner has at their disposal to whether they focus on the interior or exterior and perhaps most importantly, what the homeowner is looking to accomplish.
And remember this, there are many other projects that the homeowner may want to consider before tackling any of the projects listed here – and for practically little to no money.
If you still have questions after reading this, please do not hesitate to contact me as I will do my best in helping you out.