Remodeling – Cost Vs Return

I have found that the majority of home owners assume that for every dollar they invest in their home, they will get more than a dollar in return. Don’t shoot the messenger…….but it is not true.

According to the National Association of Realtors web site, the following is the average return on investment for the most common remodeling projects:

Deck addition — 76.8%

Major kitchen remodel — 80.4%

Bathroom remodel — 84.9%

New roof — 73.9%

Family room addition — 71.5%

Master suite addition — 72.6%


To obtain a high rate of return on your remodeling project should not be the goal. Making your home more marketable in order to obtain a sale should be the goal of your remodeling project.

Buyers typically are not going to pay much over market value in a given neighborhood. In contrast, buyers would rather spend the extra money for a nice home than pay below market value for a home they will have to fix up(unless they are specifically looking for a “fixer upper”). This means you will want your home to have similar features with similar quality as the homes your are competing against.

If you do remodel, make sure you do enough, but don’t go overboard. For example, if the homes you are competing with have oak cabinets and tile floors in the kitchen, then it wouldn’t be smart to install painted pine cabinets and linoleum in your kitchen. You will not be competitive. Buyers shop in a certain price range and they expect to get certain amenities that are appropriate for that price range. Nor would it be smart to install Brazilian hard wood cabinets and natural stone floors. The chances that you will recoup even the national average of 80.4% of your remodeling investment are not good. This is due to the fact that you will have to list your home above neighborhood market value. And as stated, buyers typically do not like to pay much over market value.


As the statistics above indicate, kitchen and baths have the greatest return on investment. That is because just about anybody can paint a room or throw up some drapes or order some carpet once they purchase a new home. But remodeling a kitchen or bathroom is a different animal. Both the kitchen and bathroom require skill and know how to properly remodel them and most consumers know it.

The easiest projects that can make a big difference are painting, landscaping and cleaning. A clean yard, mulch and some flowers will enhance the curb appeal. Paint helps to make interiors and exteriors look new. Clean the carpets as well. Having things crisp and clean will immediately catch the eye of a potential buyer.

Before remodeling for the purpose of increasing the marketability of your home, consult with two or three realtors that do business in your neighborhood. A good realtor is invaluable when deciding how much you should do to get your house ready for sale. They can save you thousands of dollars and help you increase your profit margin.

Good luck!

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