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Should I Remodel …How Much Do I Get Back?
January 15th, 2007 categories: Real Estate Tips, Remodel, Seller
Remodeling for re-sale value is always good. Making sure that you use a licensed contractor for your remodel is key.
Check out references and also check out the contractors license.
Recouping remodeling costs depends on:
- the condition of the rest of the house
- the value of similar homes in the area
- the rate of the value of change in that area
- Also, the other factor that comes into play whether remodeling or not is what the new homes in the area are valued at this has a huge impact on re-sale homes.
According to Kermit Baker, director of Remodeling Futures Program at the Joint Center for Housing Studies at Harvard University, a home improvement project costs only 20 cents to 25 cents on the dollar. The other 75cents to 80 cents spent on a project goes directly back into the home through increased value not to mention increased enjoyment.
The following costs for remodeling include labor, material, sub-trades and contractor overhead and profit. The value of some remodeling projects at re-sale is more than 100% of its original cost.
This happens where the property values are rising and/or the project is considered to be a standard expectation by the buyer for the neighborhood.
An example of that would be if most homes have 2 bathrooms and yours does not, adding a bathroom would recoup your output for the remodel since buyers expect 2 bathrooms. And not adding a bathroom might make your home sit on the market longer than others and eventually when sold it would sell for much less than another home with 2 bathrooms.
For the Sacramento Region Remodel:
Minor Kitchen Remodel costs $19,685 with a Resale Value $19,770 Cost Recoup 100.4%
Bathroom Remodel costs $15,051 with a Resale Value of $14,474 Cost Recoup 96.2%
Always remember, to check with your contractor regarding the cost and then with an experienced Realtor about the expectations of buyers for your neighborhood and the prices in the area to determine if a remodel is a good idea.
The costs and recoup chart below shows the National Averages for the Job Cost, the Resale Value and the Percentage of Cost the Owners Recouped on their initial outlay. The figures to the right of that chart are for the entire Pacific Region for the same items.
If you need more information and are interested in further data, check Remodeling Online or Remodeling Magazine.
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[…] Remodeling your home brings up questions that I’m sure most have and I will make an attempt to answer some of them with the help of resources for you to determine whether remodeling your home is to your advantage or not. In a previous article, Should I Remodel… How Much Do I Get Back, I showed the return on your dollar as well as the top remodeling rooms that gave the home owner return on their dollar spent. Just as a reminder, the top return on your dollar for remodeling when selling your house are: Kitchen, bathrooms, and additional Bedrooms (increasing square footage). Be sure to read the 10 tips below before hiring a contractor. […]
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