Remodeling That Pays Off

Learn about remodeling that pays off with the greatest dividends versus projects that aren’t worthwhile investments.

Are you planning to spruce up your home? Whether you’re getting ready to sell your house or you’re just tired of having a dated kitchen or bathroom, it’s important to make smart, cost-effective choices when you renovate.

If you’re making upgrades in anticipation of putting your home up for sale, do your research first to make sure it’s money well spent. After all, not all fix-it projects yield the same return on investment.

“If you have a house that looks old or worn, your potential buyers will discount their offer by their estimate of what it will take to bring it up to par,” says Mari Adam, a certified financial planner in Boca Raton, Florida. “But while it’s great to make your house look fresher and up to date, you don’t want to over-improve it or do idiosyncratic projects that won’t appeal to a potential buyer.”

One way to help get the most value for your remodeling buck is to consult an experienced local real estate agent. A local agent understands the market, knows what’s selling and what’s not, and is familiar with the homes that will compete against yours.

Using the CVV report as your guide

Another valuable resource is the annual Cost vs. Value (CVV) report from Zonda, a housing data and consultancy firm. This report analyzes 23 common home-renovation projects to determine how much value those projects retain at resale.

Results of the CVV report are often surprising. For example, many homeowners believe that a kitchen or bath remodel will provide the most return on their investment. But the 2024 CVV report, found that a garage door replacement was the top-performing project. With an average cost of $4,513 and an $8,751 resale value, a homeowner completing that project will recoup a whopping 194% of the cost.

The second- and third-ranked remodeling projects on the 2024 list were a steel entry-door replacement and installation of manufactured stone veneer, which returned 188% and 153% of their cost, respectively. It’s no coincidence that all three of the top-performing projects this year are exterior projects that help to improve a home’s curb appeal.

“A buyer’s first impression of a house is super strong,” says Clay DeKorne, chief editor of Zonda’s JLC group. “When buyers drive up to a house that looks really shabby on the exterior, they form an impression that directly affects how much they want to pay for it. The interior may be wonderful, but they have to overcome the impressions they form about the outside.”

Prospective buyers assume that if a house is well maintained, with an updated exterior, fresh paint, flowers and manicured landscaping, that the owner has been equally attentive to routine maintenance of the rest of the house, DeKorne says.

Remodeling that pays off – not!

The CVV also indicates which home-improvement projects don’t deliver value. An upscale bathroom addition, for example — a project with an average cost of $107,477 — returns just 32.6% of that cost at sale, and an upscale primary suite addition, with an average cost of $339,513, has a return of just 23.9%. That’s why home sellers need to carefully assess their planned projects to make sure they don’t spend money they won’t get back upon the sale of their homes.

To see the full Cost vs. Value report go to www.remodeling.hw.net/cost-vs-value/2024.

Robyn A. Friedman is a contributing writer at Kiplinger Personal Finance magazine. For more on this and similar money topics, visit Kiplinger.com.

©2024 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.

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