house exterior, Two Story Southern Charm

What you want to do

When you start thinking about a remodel, you probably have a lot of ideas for changes you would like to make to your house and landscaping. As you work your way through the process, more ideas will come along. This remodel planning checklist can help you think through the various parts of your house that could be remodeled. The list can include exciting items like changing your kitchen, and boring items like upgrading your plumbing. If adding value to your home is a priority, then you can evaluate the potential return on investing in different projects. 

What you can do

What you can do of course depends on your budget. You have a finite amount of resources, and you need to make sure you are spending wisely.

adding value to your home

What your home is worth now

To get a sense of the value that a remodel will bring to your home, you first need to understand what its current value might be. If you don’t know, start with a look at websites like Zillow,  Trulia  and Redfin. Search to see listing prices for similar homes in your area and look at closing prices on homes that have recently sold. (For Zillow and Trulia you can also plug in your own address and they have estimates of what your home value might be, based on information they have from public records.)

What you should do

On the home listings websites, you will notice that home values are listed against number of bedrooms, bathrooms and square footage. These three factors are probably the most influential for a home’s value. Consider how many bedrooms and bathrooms your house has relative to homes around it. If your home is smaller or has fewer bedrooms or bathrooms than most other homes in your area, adding a room could have a high ROI.

On the other hand, if the value of your home is already at a high point relative to others in your community, making improvements will probably have minimal impact on the overall value. The main caution is not to price your home out of the market. Your investment should be in proportion to the cost of the home. A local real estate agent would be an excellent person to advise on market comparisons.

The other major factor to consider is how much longer you expect to live in your home. If you are planning to sell in the next 3-5 years, then you should be careful not to overinvest in home improvements. The primary focus should be on critical maintenance issues and curb appeal projects. If this is the home that you hope to stay in for the next 10-20 years, then your decisions become more about which investments are worth it to you, based on how you want to use and enjoy your home for the years to come.

Cost Vs Value ReportAdding value to your home

Remodeling Magazine conducts an annual Cost Vs Value Report looking at construction estimates for different types of projects and feedback from home appraisers, real estate agents and brokers on the impact of those projects to home values. Data from their report  can be sorted by region to get a more accurate picture of the numbers for your area.

Kitchens

Looking at the national averages, an upscale major kitchen remodel might cost $107,000. The estimated cost recouped is only 58%. A midrange kitchen remodel that might cost $54,000 has a slightly higher ROI of 69%. A more minor kitchen remodel has the highest payoff – Spending about $18,500 on refacing existing cabinets, changing the hardware, a new energy efficient stove, new laminate countertops, and new mid-range sink and faucet will get you about a 75% return.

ROI does vary by region and city. In hot real estates markets like in San Francisco and Honolulu, ROI for all remodeling projects exceeded the national average. A minor kitchen remodel in SF for example has an ROI of 90% over the national average of 75%. On the other hand homes in the West North Central region of the US often get a lower ROI than the average, making remodeling projects less valuable in those locations.adding value to your home

Keep in mind that upgrades should be appropriate for the area. For example, if homes in your area tend to have remodeled kitchens and baths with high end finishes, you’ll want to try to fit within those expectations. The opposite can also be true. Investing in high-end finishes when comparable homes do not have them may not pay off when it’s time to sell.

Other projects

Looking at the national averages, here are examples of projects with the highest ROI:

Project

Job Cost

ROI

Entry Door Replacement (Steel)

$1,137

85.6%

Siding Replacement (fiber-cement)

$13,083

$79.3%

Wood Deck Addition

$9.327

77.3%

Midrange Garage Door Replacement

$1,496

75.7%

Minor kitchen remodel

$18,527

75.4%

Wood Window Replacement

$10,708

73.3%

Converting an Attic to bedroom & bathroom

$47,919

72.9%

Source: Remodeling Magazine 2013 Cost Vs Value Report

What you may notice is that even for the projects with the highest ROI, you should not expect to recoup your investment dollar for dollar.

In conclusion

adding value to your homeIf you are planning to sell in the next few years, focus on projects that will add curb appeal for a low cost, such as fresh paint, clean landscaping, and minor cosmetic upgrades to kitchens and bathrooms. Also address any home maintenance issues that would come up on a potential buyer’s home inspection. Don’t invest in expensive upgrades, and consult with a reputable real estate agent about what would make your home sell in your area. This article on About.com outlines some project ideas that are smart to consider from a resale perspective.

If you’re here to stay, focus your funds on what will make this your dream home. Chances are future buyers will appreciate the upgrades you’ve made, particularly if they fit within the norm for your community. The 2013 Houzz & Home Survey shows that home renovation projects are on the rise. Of all of the project types surveyed, homeowners are investing the most in bathroom and kitchen remodels. When asked to select reasons for remodeling, the top two factors were improving the look, feel, flow and layout (83%) and increasing home value (54%).

For more information about Renovations That Give You a Return on Your Investment, here is a nice article from This Old House.

What’s Next

Remodel Planning Checklist thumbnailDefine the scope of your project

Walk through your house and make a wish list of what you would love to change. Then click through our Remodel Planning Checklist to make sure you’ve considered the various components of your home. Also review your last home inspection report to make sure you take care of any important maintenance items.

Set your budget

Consider your savings and financing options to determine how much you can afford. Also consult with a real estate agent to get some advice on how much your home is and could be worth. Plan ahead to invest carefully and spend your money wisely.

Find remodeling professionals and get estimates

Review our guide to hiring the right people to find and select architects, designers or contractors in your area and talk to them about estimates for your project.