Many of the Main Line homeowners we consult with about a remodel ask “Will renovating my home really increase its value?” The majority of the time, the answer is not as much as it will cost to make the improvement. In other words, if you’re investing $100,000 in a major kitchen remodel, and decide to turn around and sell the next week, you probably won’t recoup the entire investment. But that doesn’t mean some renovation projects don’t add significant value to your home.
To ensure your remodeling dollars are well spent, invest in projects that not only add value, but also improve your family’s quality of life. That way, you get to enjoy the benefits and updates while you live in the home and, if you decide to sell down the road, realize a nice return.
Think Before Remodeling
The return on investment of any given remodeling job is affected by a number of factors: the local housing market, the state of the real estate market when a property’s listed, and the quality of the work performed. Historically, certain projects, such as kitchen and bathroom upgrades, window replacements, or decks have shown the greatest return regardless of where a home is located.
At Cottage Industries, we believe homeowners shouldn’t worry too much about the return on investment of every dollar they put into a remodeling project. In fact, we recommend modifying a home to suit your current needs, even if adds little value at all. That said, if you want to make design choices with a future sale in mind, it helps to think about the pros and cons of different remodeling projects you’re considering.
Calculating Return on Investment
You may have seen the numerous online calculators meant to help you determine how much of your investment will add value to your home. The problem with these calculators, though, is that they are based on percentages. When you plug in a cost of $75,000 for a master bathroom project, you’ll see an estimated return of $55,000. What it doesn’t take into consideration is that for many homes, a $75,000 investment in a master bath may not be a good idea.
Value of a Main Line Home Renovation
There are far too many factors at play in any given renovation to come up with a one-size-fits-all formula. But there are some things you can consider when trying to determine the value of your home renovation when selling your home.
- Age of Renovation. If you plan to sell your home shortly after the project’s completed, the buyer will usually be more willing to pay the full price of the renovation – assuming it is something they would have done anyway. For example, if a new deck cost you $15,000 to build, then the value of your home should increase by that amount.
- What is Removed. If you remove something – say laminate counters in good condition – and replace them with new soapstone ones, the value added would be the difference in the cost of the two materials. Or you may take a fourth bedroom and turn it into an office or laundry room. If the buyers want four bedrooms, not three, they will be thinking about what they need to invest to revert the room back, not what you invested in remodeling it.
- The Worth to Future Buyers. Not everyone places the same value on renovations. You may spend $75,000 on a new kitchen the buyer loves but only values at $50,000. Or you may install imported teak floorboards at 20% increase over oak, and the buyer may not appreciate the added value.
- Square footage. One way to be sure to add value is to add usable square footage to the home. Adding well-purposed living space is a plus to almost every buyer. That’s not to say you will recoup 100% of the cost though, so be sure the space is something you’re family needs!
As you contemplate your remodeling project, it helps to consider the value you’ll receive from the project over any cost recovery from a future sale. Home prices always reflect the buyer’s tastes and the amount they are willing to pay. To calculate whether your Main Line renovation will really increase your home’s value, don’t forget to consider whether it’s of value to you. If you end up with the home you’ve always dreamed of, it’s safe to say you’ve made a great investment.