Any homeowner who’s ever embarked on a home renovation project has had to consider the question of whether they’ll see a decent return on their investment. The last thing you want to do is plunge a large amount of money into a remodeling project that really won’t add any substantial value to your home.
Two of the most common areas of the home that receive makeovers for the sake of increasing resale value are kitchens and bathrooms. As any real estate agent will tell you, these two areas garner the most attention during an open house; for many people, having an updated and beautiful kitchen or bathroom area can be a make-or-break issue in terms of purchasing a home.
So how much value can you expect to add? While there are several factors to this equation, below are some general ideas of the results you can expect to achieve in terms of increasing the resale value of your home by remodeling your kitchen or bathroom.
The Value of a Kitchen Remodel
The kitchen is far and away the crowd favorite when it comes to producing a quality return on investment. According to the National Board of Realtors, kitchen remodels consistently offer the most bang for the buck, with a minor kitchen remodel (less than $20,000) producing a national average payback of 79.3 percent. This means that if you were to spend about $19,000 to upgrade your kitchen, you could expect to increase the overall value of your home by roughly $15,000.
In terms of what specific kitchen upgrades tend to produce the highest value, granite countertops and stainless steel appliances are perennial favorites. One technique that many homeowners use to help plan their renovations is to tour model homes that are roughly twice the value of their own home, and see what types of features can be found in the kitchens of those homes. Once they’ve done their reconnaissance, the homeowner will then see how they can imitate some of those features – affordably – in their own kitchen. This typically gives them a leg up on the competition by offering prospective buyers a little more for their money.
The expected return on investment for every remodeling project operates on somewhat of a relative basis. Much of the value of the project will be estimated in relation to the size of the house, and what particular type of upgrades you plan to make.
The first thing is to determine what type of kitchen remodel would be appropriate for your house. If you’re renovating the kitchen in a starter home, it wouldn’t be wise to go all-out with extravagant upgrades, and by the same token, you wouldn’t want to skimp on upgrades in a luxury home either.
The Value of a Bathroom Remodel
The bathroom is considered to be the workhorse of all the rooms in your house; it’s subject to more wear and tear on a daily basis than probably any other room. A mid-range bathroom remodel, which typically entails replacing all fixtures and counter tops, will cost an average of $15,700, and will add roughly $10,200 to the value of your home, a return of approximately 65 percent. Modern bathroom renovation trends that tend to garner more favor with prospective buyers include undermount sinks, wall-mounted lighting and granite or marble countertops.
Not All Remodels Are Created Equal
Much of what determines the value that a kitchen or bath remodel will add to your home is the housing market itself, which definitely varies based on which region of the country you live in. Other factors that can influence the equation include what type of upgrades or renovations are typical for the houses in your particular neighborhood, the extent of the renovations, the quality of the work itself and buyer demand for the type of improvements that you’re making.
The important thing to remember is that your remodeling project, whether in the kitchen or the bathroom, needs to reflect your neighborhood. Don’t invest thousands of dollars into luxurious renovations unless your neighborhood is full of very high-end houses. On the other hand, if your kitchen or bathroom looks about 30 years out of date compared to other houses in your neighborhood, you’ll definitely be at a disadvantage. Your decision to scale up or scale down your renovation plans will always be relative to comparable houses in your neighborhood.