Survey: Maintenance work, not big renovation, offers best return on investment
Feb 03, 2013 (The Columbus Dispatch - McClatchy-Tribune Information Services via COMTEX) --
In the world of HGTV, remodeling projects prove inexpensive and offer tremendous returns.
Then there's the real world.
To try to gauge the cost of remodeling projects -- and which ones yield the most bang for the buck -- Remodeling magazine each year publishes its "Cost vs. Value" report.
The survey for this year shows some pleasant results for homeowners: Return on investment is up across the board for the first time in six years as home prices finally start to increase.
"I'm not surprised, given what I've been hearing the last six months anecdotally from builders," said Sal Alfano, editorial director of the publication.
Still, homeowners shouldn't expect to get a dollar-for-dollar return when remodeling. The magazine estimates that remodeling projects would return an average of 60.6 percent of their cost if the home were to sell.
Because the housing recovery has arrived more slowly in central Ohio, homeowners here can expect to get an average of 54 percent back on their renovations, according to the survey.
Not surprisingly, the magazine finds that the best returns tend to be on projects that cost the least and are highly visible. Eight of the 10 projects that yield the highest returns in central Ohio are replacement and maintenance projects, instead of additions or improvements to the home.
The best return comes from a new steel front entry door, which Remodeling estimates will return 73.7 percent of its $1,125 cost when the home is sold in central Ohio.
Also faring relatively well in central Ohio and elsewhere: window and siding replacement.
On the other end, the study found that in central Ohio a new sunroom and a remodeled home office would return only about 40 percent of their cost.
The magazine's estimates rely on the cost of the project, which comes from RemodelMAX, a remodeling-software company that bases its numbers on local material and labor costs, and the estimated value the project would add to the home in a sale, which comes from almost 4,000 real-estate agents and appraisers nationwide.
Alfano acknowledges that the numbers are averages, and every home is different. The return will depend, for example, on the previous condition of the house.
Remodeling a kitchen with broken cabinets, cracked countertops, scorched flooring and a dysfunctional layout will return more of its cost than remodeling a kitchen that is in good condition but needs cosmetic attention.
Home sellers also must consider the items buyers say they most want today.
At the top of most surveys are splashy and costly features such as an open modern kitchen or large baths and closets.
"People tend to be visual buyers," said Martin Soller, a Coldwell Banker King Thompson agent in Dublin. "If it's something they can see like granite countertops or new backsplash or new marble tile in the shower, those kinds of things really add a lot of perceived value to them."
It's also important to know the neighborhood. A $200,000 addition in a neighborhood full of $250,000 homes isn't going to pay off. On the other hand, real-estate agents know that certain projects can add particularly strong returns in certain neighborhoods.
"If you're looking to add value in Upper Arlington, I'd suggest adding a third-car garage if you've got space for it," Soller said. "In Grandview, where you've got starter homes that cost $300,000, the biggest value you can add is a second bathroom because a lot of homes only have one full bath and maybe one half-bath."
The survey also does not take into account how long homeowners plan to stay in the home, which is key in considering a project, said April Howe, a project coordinator at the Cleary Co. remodeling firm in Columbus.
"When you're truly remodeling your house, you're trying to increase the level of happiness in your home," she said. "You're doing it for other reasons than cost.
"You have to think how many years you're going to be in the home after the remodeling. That's a huge factor. If you're going to be in there six months, that's important, but if you're planning to be in there more than five years, that remodeling will pay for itself just in quality of life."
Howe and other remodelers say that, if nothing else, the survey serves as an antidote to clients' unrealistic cost expectations.
Homeowners who think a basement can be overhauled for $15,000 can see that the average cost of remodeling a basement in central Ohio is $60,000.
Likewise, a master suite isn't likely to be added for $30,000. The survey places the cost instead at $100,000 for a "midrange" addition and $217,000 for an "upscale" addition.
Alfano thinks the survey can be a useful tool for homeowners and remodelers, but he urges homeowners to get help from professionals if they're looking to renovate.
"If they're seriously contemplating a major investment like an addition or a serious remodeling in the house, we recommend they talk to a qualified remodeler, and if they have concerns about resale value, talk to a real-estate agent who knows the neighborhood."
___ (c)2013 The Columbus Dispatch (Columbus, Ohio) Visit The Columbus Dispatch
(Columbus, Ohio) at www.dispatch.com Distributed by MCT Information Services
[ Back To Technology News's Homepage ]