Return on Investments for Home Renovation Projects

When it comes to home upgrades, they’re not all created equal in terms of getting a return for your money. Despite what HGTV leads us to believe, doing a bathroom renovation might not be the automatic boost to the resale value you assume it will be. So before you go spending thousands of dollars on a renovation project, let’s take a look at some Cost vs. Value data. (Note that this data is for the Dallas-Fort Worth market, which can differ significantly from national data, so local information is important!)

THE BREAKDOWN

MANUFACTURED STONE VENEER (replace existing vinyl siding on bottom third of street-facing façade and outlining entry archway)

Avg cost: $9,276
Avg resale value: $8,003
Cost recouped: 86.3%

MINOR KITCHEN REMODEL(new cabinet fronts and hardware, upgraded appliances, new countertops, resilient flooring, fresh paint)

Avg cost: $22,153
Avg resale value: $15317
Cost recouped: 69.1%

FRONT ENTRY DOOR REPLACEMENT (steel and replace existing lock set)

Avg cost: $1,803
Avg resale value: $1,181
Cost recouped: 65.5%

SIDING REPLACEMENT(fiber-cement – vinyl costs a bit more and has significantly lower return)

Avg cost: $15,881
Avg resale value: $10,273
Cost recouped: 64.7%

DECK ADDITION (wood – composite is more expensive and has lower return)

Avg cost: $13,311
Avg resale value: $8,484
Avg recouped: 63.7%

GARAGE DOOR REPLACEMENT (reusing existing motorized opener, new steel door featuring windows with factory paint and insulation)

Avg cost: $3,600
Avg resale value: $2,245
Cost recouped: 62.4%

WINDOW REPLACEMENT (vinyl – wood costs a bit more and has much lower return)

Avg cost: $17,101
Avg resale value: $10,645
Cost recouped: 62.2 %

BATH REMODEL(replace fixtures, upgrade countertop, tile flooring, porcelain tub with tile surround)

Avg cost: $20,155
Avg resale value: $11,271
Cost recouped: 55.9%

ROOF REPLACEMENT(asphalt shingles – metal is significantly more expensive and has lower return)

Avg cost: $23,044
Avg resale value: $12,604
Cost recouped: 54.7%

TO RENOVATE OR NOT RENOVATE—THAT IS THE QUESTION

One of the biggest factors to consider in your reno projects is whether you are selling immediately or plan to live in the house for quite a bit longer. If you’re renovating to sell, you should talk with a local real estate agent who can help you decide which projects to do, if any. For one thing, your area matters. It typically backfires to be a much nicer house than the rest of your neighborhood so you don’t want to “over-renovate,” as they say. Also, sometimes it really does make more sense to leave the house as-is and let the buyers do they projects they want, the way they want.

That being said, if you do a renovation project before selling, remember that it should not be highly personalized. In other words, don’t think of it as your house anymore, because you want it to appeal to buyers. So keep colors neutral and don’t do anything unconventional.

However, if you’re going to stay in the house for a while, then maybe keeping your personal tastes in mind is more reasonable. Your home should be pleasing and comfortable for you as long as you’re living there. But remember if you do anything too eccentric, you might need to change it before selling or you could have a harder time selling the property for top dollar.

A DEEPER LOOK

Not surprisingly, this data proves the old real estate saying true: kitchens and bathrooms sell houses. What’s interesting is that the projects discussed here are not major renovation projects. You don’t necessarily need to completely gut your kitchen or bathroom and start from scratch. Simple updates to fixtures, cabinet doors, paint, counters, and appliances can be enough to get a good return. Good design choices are key to easy and relatively inexpensive changes impressing a buyer.

This data also shows how important curb appeal is. Four of the nine projects have to do with the exterior: the garage door, front door, siding and stone veneer. First impressions matter! At the very least, if you can’t afford updates, clean everything extremely well and consider fresh paint, which can make a world of difference. And don’t forget landscaping! Make sure the grass is manicured, your mulch is in good condition, and if you’re able, plant flowers to add some color.

The deck project also makes sense given how many people like to be outside. Keeping in mind that we’re in Texas and summers here are HOT HOT HOT, add some shade if it’s in your budget. If a covered deck is too costly; you could just add some seating with a large umbrella or two.

And then there are the less fun projects. I know, getting a new roof or new windows is like spending money on car maintenance… they’re not really the most exciting way to spend money. They don’t have the wow factor that a bathroom remodel has, for example. But your roof and windows are important because their quality impact the comfort of your home, the costs of your energy bills and the likelihood of water damage and mold. And buyers particularly care about your roof’s condition, especially if they suspect that they’ll have to pay to replace it once they buy the house.

BOTTOM LINE

Not every project will be a good return on your investment when it comes time to sell. And the details of your project can matter as much as the project itself—doing poor work or making the wrong design choices, for example, can end up hurting your resale value. It’s a good idea to talk to a local real estate agent to find out what would be worthwhile for your house, since it depends on your neighborhood. If you’re in in the DFW area, I’d be happy to chat with you about your home!

All the best,
Ian Van Kooten, REALTOR
303-589-3364
“It’s good to be home.”