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After the Remodel, It’s Payback Time
Sanette Tanaka / The Wall Street Journal / April 25, 2013
‘Sexy’ renovations like gourmet kitchens rarely recoup the construction costs when it comes time to sell the home, a report finds
A home renovation typically comes with clouds of plaster dust and piles of construction debris. Is it all worth it?
Yes, if the remodeling project ultimately makes life easier and more beautiful. But maybe not when it comes time to sell.
Lower-cost home-improvement projects that enhance the curb appeal are most likely to see construction costs recouped in a resale, according to research by Remodeling magazine. For example, replacing a home’s siding with fiber-cement panels can earn back 79.3% of the project cost when the house sells. Replacing the garage door recoups 75.2% of the cost, and installing insulated, vinyl windows earns back 71.2%.
And while big master bedrooms, gourmet kitchens and spalike baths will make your friends drool, major remodeling projects generally recoup less than 60% of their costs. “They’re sexy rooms. That’s where all the cool stuff is. But they’re also the most complex and expensive rooms because they have so much going on,” says Sal Alfano, an editorial director who manages the annual Cost vs. Value Report for Hanley Wood, the magazine’s publisher.
The lowest return per dollar spent comes with a master-suite addition. That generally costs more than $220,000 and earns back only 52.1% of the cost in resale, according to the report, which was released in January. To calculate project costs, the report uses figures from RemodelMax, a publisher of construction-estimating software. Estimated resale values come from a National Association of Realtors survey of more than 3,900 appraisers, sales agents and brokers conducted in August and September of last year.