Many people go to sell their home and their realtor takes one look at their kitchen and tells them they need to get it remodeled before trying to sell the house. They also tell them they need to get the house painted to which of course I certainly agree, but then what would you expect coming from a painter?
Some go about racking up their credit cards or taking out a second mortgage to get the old place fixed up to sell and assume everything they put into the house will increase the value of the house by that much if not more when it comes time to sell, and thereby recover their short-term investment. But is this really the case?
According to this infographic the answer is no, it isn’t (click on the picture for a larger, more readable view). At least not directly. Your average cost for hiring someone to remodel your kitchen is about $17,000 but your return on investment (ROI) is 70%, or $11,900. In other words, you are spending $17,000 to increase the value of your home $11,900, so you are losing $5100! Why would you want to do that? If you do the work yourself you might break even, assuming you have the expertise and don’t botch up the job.
Kitchen Remodels Make Your House Sell Faster, Not for More
If your real estate agent didn’t make this clear the main benefit of remodeling before selling is to eliminate barriers to buying your house for as many people as possible. If you have a kitchen in which for half of the people looking at your house it’s a deal breaker then it’s going to take that much longer to sell the place. And of course your realtor may end up showing it twice as many times in order to sell it so there’s definitely incentive on his or her part to get you to spend the money on your house. It’s to your realtor’s advantage.
Selling Fast Saves You Money if You Move Out Before Selling
If you are going to live in your house until it sells then it’s not as crucial to fix it up since time is not working against you. If you have already moved out before putting it on the market then you might be paying for two mortgages until the old house sells and that can add up to an extra expense fairly quickly. If you vacate your house to sell it then how fast it sells makes a huge difference in how much you will end up with in your pocket when everything is said and done.
What Brings the Best Return on Investment?
There is only one thing that has a 100% ROI and that’s replacing your old furnace with a new energy efficient model. Your buyers will be calculating how much money they will save on energy bills and maintenance with a newer system and that will add value to your house equivalent to the cost of the new system.
What’s the Second Best Investment in Your Home?
Yup, you guessed it. Painting. Painting the exterior will give you a 90% ROI.
Regional Differences Are Noteworthy
The infographic here is based on national averages but the West Coast figures are a bit more encouraging. Remodel.hw.net breaks it down by region and shows that for the Seattle 4 county area there are several remodeling jobs that might even bring you positive ROI including: adding an attic bedroom, basement remodel, wood deck addition, entry door replacement, minor kitchen remodel, and window replacement.