Realtors® are often asked by potential sellers what they would recommend to be fixed prior to the seller putting their home on the market. There are no pat answers to those types of questions because each property is different, every circumstance is different and every Realtor® has a different style or take on that question. Some are motivated to just get a sale, so asking the seller to spend, spend, spend is the first recommendation they make. Of course any home sells faster and usually at top dollar when everything is in tip-top shape, but is spending a lot of money on fix-up items really what is best for the seller’s bottom line?
Every year the National Association of Realtors® prints a cost-vs-value report that compares local pricing to the national average for certain home repairs and calculates the approximate return of investment for the homeowner if they do certain repairs. For example; In the Pacific Northwest the average cost of insulating an attic was $1,406 with a resale value of $1,726. That means that the homeowner could recoup 122.8% of their money spent. The statistics for most other repairs aren’t that favorable for the homeowner!
The average cost return for a bathroom remodel was only 70% of value spent. Items such as deck addition, kitchen remodel, master bedroom remodel, and siding replacement showed a similar poor return on investment. In other words you probably won’t get your money back on most remodel investments. But look on the bright side! You get to use those improvements until your home sells and it may make your home sell faster!
Those are all things to consider when you are weighing the cost-to-value benefits of any remodel. Keep in mind that remodeling or upgrading quality of materials are a different concept than fixing broken items such as windows or water damage or worn flooring. Repairing items like those (deferred maintenance) is like fixing the brakes on your car. It doesn’t make it worth anymore, but is certainly necessary!
The top 5 items on the list (in terms of good return on investment) from the recent study shows that attic insulation, entry door replacement, adding stone veneer, adding an upper story room or garage door replacement were the most cost effective upgrades. Most of those still showed a loss when it comes to resale value. I guess the moral of the story is, be careful when others try to get you to spend money just so they can get a sale!