When Renovating, Keep it Simple
When it comes to remodeling, it's best to keep it simple. Small cost-effective home renovations will likely get the best return on investment, according to surveys, appraisers, and real estate professionals.
According to the 2015 Cost vs. Value Report, large-scale home remodeling projects are often a gamble, and aren't likely to return their full cost. Small home improvements like upgrading to a steel door, updating the garage door, replacing wood windows, and making small updates to the kitchen will recoup nearly 100 percent of their cost. Bottom line? Simple replacements cost a lot less and provide a bigger payback to homes than remodels or additions.
Top 5 projects nationally in terms of cost recouped:
1. Entry door replacement (101.8%)
2. Manufactured stone veneer (92.2%)
3. Garage door replacement—mid-range (88.5%)
4. Siding replacement, fiber cement (84.3%)
5. Garage door replacement—upscale (82.5%)
"The point is that the more expensive the work you do on a property, the higher the risk is that the buyer is not going to be willing to pay for it," Jonathan J. Miller, the president of Miller Samuel, a New York appraisal company told the New York Times recently. "If your kitchen is old and dated and you completely renovate it, you're gambling that the buyer is going to like your taste."
Focusing on renovation projects that improve the curb appeal of a home is a good strategy. Refinishing hardwood floors, replacing light fixtures, re-grouting bathroom tiles, giving the walls a fresh coat of paint are all simple renovations that can add big value. "A lot of these minor upgrades relate to appearance, and the first impression a buyer might get for a property," says Michael Vargas, an appraiser in Manhattan. "They're not necessarily concerned about what’s behind the wall; they're just concerned about how the property looks."
While not all remodeling jobs earn a killer payback, the Cost vs. Value survey found that minor kitchen remodels that focus on upgrading the cabinets, appliances, and countertops are often a good bet, with a national average payback of 79.3 percent.
Still, remodeling projects are not "one size fits all" and what sellers can hope to recoup from improving their home depends on many factors, including where they live, the condition of the home, the quality of the work, and if the upgrades are comparable to those in the neighborhood.
Top renovations for apartments and houses:
- Refinishing hardwood floors
- Painting walls
- Replacing kitchen countertops
- Installing new kitchen appliances
- Replacing kitchen cabinet doors and drawer fronts
Top renovations for houses only:
- Replacing the front door with a new steel-and-glass door
- Replacing the garage door
- Replacing siding
- Adding a wood deck
- Replacing windows with wood windows
Sources: "Small Renovations, Big Payoff," The New York Times (April, 24, 2015), "The 10 Most Cost-Effective Renovations," The New York Times (April 24, 2015) "2015 Remodeling Cost vs. Value: Less Is More," REALTOR® Magazine (Jan. 2015)