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Recouping Your Remodeling
Investment
Recouping your remodeling investment may be your goal
when you sell your house. But when it comes to resale value, all home
improvements are not created equal. As a rule, kitchen remodeling projects and
bathroom additions almost always pay back 90 percent or more of their costs.
However, finishing a basement usually pays back less than 50 percent. Other
improvements fall somewhere in between.
Consider these payback estimates* for the most typical home improvement
projects:
| Project
|
Cost
|
Average Payback
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| Add a new heating or air conditioning system |
$2,000 to $4,500 |
100% for heating; 75% for air conditioning |
| Minor kitchen remodeling |
$2,000 to $8,500 |
94% to 102% |
| Major kitchen remodeling |
$9,000 to $25,000 |
90% |
| Add bathroom |
$5,000 to $12,000 |
92% |
| Add a family room |
$30,000 |
86% |
| Remodel bathroom |
$8,500 |
77% |
| Add a fireplace |
$1,500 to $3,000 |
75% |
| Build a deck |
$6,000 |
73% |
| Remodel home office |
$8,000 |
69% |
| Replace windows |
$6,000 |
68% to 74% |
| Build a pool |
$10,000 and up |
44% |
| Install or upgrade landscaping |
$1,500 to $15,000 |
30% to 60% |
| Finish basement |
$3,000 to $7,000 |
15% |
*Compiled from several published surveys
Understanding Payback Value
Payback value depends heavily on the real estate market and prevailing property
values. If the market is slow, expect to see less payback than you would in a
fast market. Also, consider the neighborhood: If you remodel your house to twice
the size of the other homes on the block, it is unlikely that you will be able
to sell at double the price. Issues that can influence payback value include:
 | Type of improvement
Kitchen and bathroom remodeling projects consistently return the most in
resale value and almost always help sell a house. Converting a basement into a
family room yields the smallest return on the investment.
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| Scope of improvement
Projects can be large or small. Sometimes, the cumulative effect of small
projects can pay back more in resale value than that of larger projects. Small
projects tend to be cosmetic in nature: fresh paint, new doors, garden
windows, and ceiling fans. Large improvements involve adding or upgrading
living space.
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| Desirability
Today's fad may be tomorrow's standard. Backyard decks, for example, were
difficult to find 30 years ago; now they are common. Decks may not have paid
back very much in resale value decades ago, but as decks have become more
desirable, their resale value has increased.
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| Cost
The price of home improvements fluctuates depending on economic conditions and
region. If remodeling costs are particularly high in your area (or home sale
prices particularly low), you may not recoup as much on your investment as you
would if costs were in sync with sales prices. |
This information
provided by MSN. Click the link below to visit their Home Advisor Web Site.
http://homeadvisor.msn.com/improve/whichimprovementspayback.aspx
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