Recovering the Cost of a Home Remodel When Selling

Recovering the Cost of a Home Remodel When Selling

4 must-read tips to maximize your real estate investment.

Can You Recover the Cost of a Home Remodel When Selling?

Sean and Marla Larson purchased a condo that was very outdated. They took on a large remodeling project to update a bedroom, the main bath, and kitchen. Just as projects were wrapping up, Marla got a job opportunity in another state. The Larson’s were able to sell their updated home and make a nice profit because of selling in a hot real estate market, but their story is not altogether typical.

The Larson’s also said they would have done things differently had they known they would not be in their home to enjoy the fruits of their labor. Their construction stretched out to two years, including having to bring old plumbing up to code. 

The market, location, the type of remodeling and selling price within the market are some of the factors that can make a difference in whether it is worth undertaking a major house or condo remodel before selling. Sellers must keep in mind remodeling means increasing the sales price to recoup the investment.

Whose Style Is It?
According to Remodeling Magazine, few remodeling projects actually recoup all costs of the project. One downfall is buyers may not like the remodel style or materials, which diminishes the value of improvements. You may like tropical woods or painted cabinets, while someone else wants clean lines and an industrial look kitchen.

The old adage of remodeling kitchens and baths are a good investment may only be half right- kitchens return only 84.4 percent of the cost of the project on average. Remodeling is not easy- it involves your time, creates difficult living conditions, and often exceeds planned budgets.

Projects that are recommended are upgrading an old bathroom and replacing siding. According to Remodeling Magazine, these are the two best projects for a return on investment, but only by a slight margin, with siding recouping 103.6 percent and baths 102.2 percent on average. 


4 Tips to Help Decide Whether to Remodel

1. Ask your realtor to create a schedule of open houses of homes in your price range that have been remodeled. As you tour the home, image what the selling price would be if the remodel had not been done. In order to be profitable, the difference between the unfinished price and the remodeled price must not exceed the remodel budget.
2.  Find a similar condo to yours in your area that has been remodeled. You may need to do some work just to compete with other available inventory.

3. If you go into debt on a remodel, you may not have enough for a down payment or to make changes to the next home you purchase. If you take out a loan for improvements, it may affect the amount you are able to borrow on your next home.
4. Stick to a neutral palette if you do decide to remodel- White porcelain bath fixtures and off-white paint creates a blank canvas to appeal to as many people as possible. A neutral palette helps select décor pieces stand out.

Many clients have asked “do you think my remodel was worth it” after they have completed the work. If you are thinking about selling, contact us for a complementary review of your remodeling options and likely return in today’s market.