Home Remodels That Pay Off vs. Ones with Low Returns

You may think that any amount of money you spend on fixing up and modernizing your home will benefit you when you sell. That’s a common misconception about remodeling. Every buyer will have different standards and expectations for the appearance of the home. Most, however, won’t be able to overlook issues with critical systems, like the roof or the furnace.

Your best option is to focus on a combination of remodeling projects that make you happy with your home and projects that are likely to increase the perceived value of your home.

Major Maintenance Outperforms Aesthetic Changes

Most real estate professionals will tell you that buyers pay the most attention to the bathroom, kitchen and master suite when choosing a home. That may make you want to sink thousands into a new, trendy countertop. While doing so can help make your home look more inviting, spending that money on new windows, siding or roofing may be the smarter move.

In general, siding replacements pay for themselves, bringing in about 92.8 percent of the cost during selling. Replaced windows and roofs also recoup a lot of their own costs, with an estimated 80 percent return on your investment when you sell. The only interior remodel that shows a similar rate of return would be a minor kitchen remodel, costing approximately $15,000. This remodel could return 92.9 percent of your investment at the time of sale.

Popular Projects with Low Rates of Return

One of the lower returns for remodeling projects includes the universal bathroom design, which averages a return of about 68.4 percent. Adding bars and removing barriers to make your bathroom accessible by the elderly and those with mobility issues just doesn’t do as much as people think to boost the value of their home. A generic bathroom remodel, including new tub, toilet and vanity, may recoup almost 65 percent of the cost of the remodel.

Similarly, a major kitchen remodel, costing upwards of $50,000 may only recoup 65.3 percent of your investment in the remodel. As noted previously, a lower cost and more modest remodel will have a better rate of return.

If your home doesn’t have a master suite, adding one could make the home more livable for you. Having your own room, bathroom and walk-in closet can make daily living more comfortable. However, it won’t do as much as you’d hope for the price of your home. You’ll probably spend over $119,000 on this project and recoup just 64.8 percent of what you spend. Similarly, adding a new bathroom, which averages a price of more than $40,000, will only add about 53.9 percent of what you spend to your home’s value.

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