Reno's that increase home value??

[My Dream]

This is a rant about home reno shows that constantly boast about how the kitchen/bath reno they just did helped improve the value of the home by over 100%. Yes I know that there are many factors to consider such as location, age, size of home, type of reno etc. But please explain to me how the average $40,000.00 kitchen reno can improve the value of the average home by $50,000.00.

I also believe that these shows mislead when they say, "you purchased the home for $400,000.00, then after the $40,000.00 kitchen reno, it's now worth $475,000.00. Well maybe that's true, but there is no mention of when that home was purchased, it could have been 10 years ago and there is no mention of increased property value.

My DW loves those shows but always rolls her eye when I claim "hog wash". I believe they exaggerate way too much, or take situations which aren't average to the regular homeowner.

Let me ask you a question:

I just did two bathroom reno's that were quoted at around $30,000.00 each (material and labour). Having done it myself instead, it didn't cost anywhere near that amount. My question is, how much more would that increase the value of my home (of same size, design and lot size) compared to my neighbours? If it were featured on a home reno show, they would inflate the amount to over 100%, but being me....(read below)

My answer.......very little!

The only reno that almost guarantees more then a 100% return is painting.

 

[Texas Proud]

There are many tables that show the percent of a reno that you are likely to get back... just search...

I agree with you that in most cases, the value increase of a property is less than the cost of a reno... but that is not always the case...

If the property is in bad shape, then it is likely not going to sell for anywhere near the value of the house plus reno... IOW, lets say the kitchen is not just old, but in bad shape... all bathrooms are moldy and with broken items... and the floor is 70s shag carpet... you can spend a bit of money to fix it up and then sell it for more than you paid for it plus the renos...

I can say that the house I sold paid back more than the reno costs I put in... because almost everything was dated or not working... I did a cheap reno that made it look a LOT better... but, this is a small percent of renos, so that is why I say it usually does not pay..

 

[glippy]

Well there is potentially some value in you having put up with contractors coming in and out of your house for days or potentially weeks, plus you picking out designs, shopping around, getting prices, taking some risk that your house and possessions wouldn't get burned down in the process, etc. And you having done without a fully usable kitchen in that time. I'm sure the future owner not having to put up with that headache is worth something.

But I agree that those declarations that, "The house is now worth this!" Are generally baloney. It's worth whatever the next buyer is willing to pay for it, not what some analyst says it is. The best is when I hear, "My house is worth $X, but I couldn't sell it for that much right now..."

 

[W2R]

I am skeptical about recouping the cost of renovations when selling a home, this year and in my location anyway.

However right now, in my location, a renovation might increase the probability of a home selling at all. The market still has not recovered here AFAIK.

 

[MichaelB]

I am skeptical about recouping the cost of renovations when selling a home, this year and in my location anyway.

However right now, in my location, a renovation might increase the probability of a home selling at all. The market still has not recovered here AFAIK.

My thought as well. Marginal price effect but easier sale.

 

[Bestwifeever]

The only way a kitchen renovation can increase the value of a house by $50K is if it didn't have a kitchen to begin with. Otherwise, baloney. Although a 50-year-old kitchen will surely subtract from the value, a modernization imho does not add value.

 

[freebird5825]

Off the top of my head, I would guess that the following "renovations" would be a good ROI...

New roof
Paved or resurfaced driveway
Exterior paint job (if applicable) or house wash (vinyl or aluminum)
Overgrown shrubbery replaced with newer smaller ones
Dead trees and/or branches or those too close to house taken down
Repair/resurface cracked concrete walks/steps
Fresh stain on wooden step/porches/decks
Lawn treatment to be rid of weeds

Any others?

 

[W2R]

Off the top of my head, I would guess that the following "renovations" would be a good ROI...

New roof
Paved or resurfaced driveway
Exterior paint job (if applicable) or house wash (vinyl or aluminum)
Overgrown shrubbery replaced with newer smaller ones
Dead trees and/or branches or those too close to house taken down
Repair/resurface cracked concrete walks/steps
Fresh stain on wooden step/porches/decks
Lawn treatment to be rid of weeds

Any others?

Again, zero recoup of expenses on these here, either. Might help in getting people to view the home, so it might increase the probability of selling at all. But not at a higher price here at this time, AFAIK.

 

[Bestwifeever]

If a house on the market needs a new roof it will either get no lookers or it might bring in an offer that deducts the cost of a new roof. A new roof will really not pay for itself.

The only thing I've ever heard that returns 100 percent on the investment is an additional bathroom or bedroom (NOT a renovation of an existing bathroom/bedrooms, but an increase in the number of bathrooms/bedrooms).

 

[Amethyst]

We are firm believers that lack of upgrades will cause a home in our area to lose significant value, unless it's a seller's market. It's just not easy to calculate exactly how much value.

One thing we do not care for, in higher-end homes, is home-grown upgrades. We can spot them a mile away and we bet most buyers can, too. Not sure what it is, the job can be tidy, yet still practically yell "the cheap owner just did this to sell the house." We would rather have the original house, maybe with outdated fixin's but in good shape.

Amethyst

 

[JOHNNIE36]

We are firm believers that lack of upgrades will cause a home in our area to lose significant value, unless it's a seller's market. It's just not easy to calculate exactly how much value.

I agree and is holding true in this area also. When we bought this house about two years ago, it had good "bones" but was really dated. Good shape but dated. Built in 1991 but had recently had the tile roof painted, the house exterior painted, all new plumbing, new A/C and insulation overhead. However, the kitchen was original as were the bathroom cabinets and the ceilings were the popcorn style. We actually gutted the place and redid the interior completely including tile throughout. So we've put about $80K into this place and having bought it right, would not consider taking anything less than what we have in it.

The important thing here is that we wouldn't do that to a place just to flip it. Those days are gone for quite some time. We wanted to make this our last home. No more moving. So, I would suggest doing what you want, including going over the top in remodeling, if you plan on staying a while. I love our place and DW has done all the decorating (it's her thing).

People in this community, especially the area in which we live are putting a lot of money in renovating their homes, bringing them up to date. My tile guy is working six and seven days a week. This is strictly a retirement community and I guess people are planning to stay awhile. It's good to see it happening. Tells me they like the community and it's worth putting some money into their homes.

 

[zinger1457]

This wouldn't hold true to all areas, like beach front properties, but at least where I live the square footage of your house is by far the biggest contributor to the value of the house. I put a 500 sq-ft addition on by house 8 years ago at a cost of about $50/sq-ft when my house was appraised for about $120/sq-ft. I doubt it would be such a good deal today, the sq-ft cost for me to build a similar addition would be a lot closer to the appraised sq-ft value. I do agree that kitchen and bathroom renovations are mostly money losers.

 

[My Dream]

Thanks for the replies everyone.


If you were to take two identical homes on the same street with the same size lot and one had a bathroom reno (cost $20,000.) and a kitchen reno (cost $40,000.) do you believe it would add $60,000. value? Let's assume the neighbours house that didn't have those reno's remained with the builders bath and kitchen. These shows would lead you to believe that not only would you get your money back it would increase the value above what you spent. I'd say that's rare and believe you may only get half ($30.000.) over the neighbours house.

I understand that it would depend on many variables such as how the bath and kitchen were done, location, size etc. but let's take the average.

 

[eytonxav]

Thanks for the replies everyone.


If you were to take two identical homes on the same street with the same size lot and one had a bathroom reno (cost $20,000.) and a kitchen reno (cost $40,000.) do you believe it would add $60,000. value? Let's assume the neighbours house that didn't have those reno's remained with the builders bath and kitchen. These shows would lead you to believe that not only would you get your money back it would increase the value above what you spent. I'd say that's rare and believe you may only get half ($30.000.) over the neighbours house.

I understand that it would depend on many variables such as how the bath and kitchen were done, location, size etc. but let's take the average.

I've heard its not a good idea to be the most expensive house in the neighborhood. That said, I do think you would get a premium for your house and sell it faster, but I suspect you may not get out what you put in if the first statement is true.

 

[tryan]

Having done a bunch of these things over the last 25 years ... the MOST you can hope for is to re-coop your costs.

More than likely - after the house is lived in for a little while (ie. more wear n'tear) you will NOT re-coop your costs.

Reno's are for the people living in the house ... not re-sale. Exspecially in a down RE market.

Story time (as I said on another thread) bought a HUD home at auction for 67k. Put 35k into it. Kitchen was a gut-job, put corian countertops, new windows .... soup to nuts. Realtor walks thru says " this is beautiful! Nothing like this on the market here! I'll start it at 150k". 3 weeks later 140k ... three weeks later 130k ... three weeks later 120k. Now it's December; time to heat the place. I said to my realtor "you've got 3 weeks to sell this thing; or I am putting a body in it to keep the pipes warm." She says "gee, I don't know ... 109K?".

I rented is for 1300/mo within 2 weeks. So much for renovations helping the cause.

 

[Texas Proud]

Again, zero recoup of expenses on these here, either. Might help in getting people to view the home, so it might increase the probability of selling at all. But not at a higher price here at this time, AFAIK.

W2R.... I was thinking the same thing about the list.... but then it hit me that you will get a 'higher price'.... if all of these items were 'bad', then nobody is going to buy the house at the value of houses around you... IOW, there will be a discount because of these items... so, adding these items will bring a higher price, just not higher than the neighbors...

The house I bought had a clause in it that if the roof or AC system was over 10 years old the price went down by $5K... the AC unit outside was.... they thought they had replaced it, but had only replaced the inside part..

 

[freebird5825]

W2R.... I was thinking the same thing about the list.... but then it hit me that you will get a 'higher price'.... if all of these items were 'bad', then nobody is going to buy the house at the value of houses around you... IOW, there will be a discount because of these items... so, adding these items will bring a higher price, just not higher than the neighbors...

Maybe I was confusing "curb appeal" with property/structure value (lot size, age, number of bedrooms/baths, square footage, energy efficiency, construction material, etc) ?

I have very little experience with real estate. I was thinking like a home buyer when I made the list. In other words, if I had several choices of places to buy, I would use the items not well maintained or modernized as a discount or bargaining tool in my purchase/counter offers.

Educate me...

 

[JOHNNIE36]

Maybe I was confusing "curb appeal" with property/structure value (lot size, age, number of bedrooms/baths, square footage, energy efficiency, construction material, etc) ?

I have very little experience with real estate. I was thinking like a home buyer when I made the list. In other words, if I had several choices of places to buy, I would use the items not well maintained or modernized as a discount or bargaining tool in my purchase/counter offers.

Educate me...

This post begs the question of if you buy it at a discounted price because it needs new this or new that and the A/C is on it's last leg, are you going to buy it and live in it the way it is? A lot of people want a "turn-key" unit. Because of the problems in the real estate market, maybe this thinking has changed. One would probably buy a home in need of repairs and/or upgrades and then renovate it to suit their tastes.

 

[Texas Proud]

Maybe I was confusing "curb appeal" with property/structure value (lot size, age, number of bedrooms/baths, square footage, energy efficiency, construction material, etc) ?

I have very little experience with real estate. I was thinking like a home buyer when I made the list. In other words, if I had several choices of places to buy, I would use the items not well maintained or modernized as a discount or bargaining tool in my purchase/counter offers.

Educate me...

I am agreeing with your previous post.... IOW, lets say the house should be priced at $100K... if everything were in good shape...

Now, you have an old roof... that means you will not get $100K for the house, but less. Lets say it is $95K... if the roof costs less than $5K, you will see a return on your money as you can sell it for $100K... but if the roof cost $10K, then you will not recoup all your money because you can only sell it for $100K...

Now, say the house is in great shape, but is 'dated'... the house should sell for about $100K... putting in a $20K or a $40K kitchen will not make the house worth $120K or $140K.... sure, maybe a bit more because of a nice new kitchen, but you will not get back your upgrade...


Agreed that it is a bargaining tool... I took off money from my last house purchase because of an old roof and AC system... I even had it as part of my bid... however, they were there and working so I have not had to replace them after a couple of years... and the discount that I got would not pay to replace them...

 

[My Dream]

And I'm in agreement will most everyone that's posted, for the most part a renovation is done for the homeowners, not for resale value. With that being said, how to these home reno shows get away with saying, "this house is worth $60,000.00 more with a kitchen bath reno". They do it on almost every show and the viewers eat it up....

Thank you for your comments.

 

[freebird5825]

This post begs the question of if you buy it at a discounted price because it needs new this or new that and the A/C is on it's last leg, are you going to buy it and live in it the way it is? A lot of people want a "turn-key" unit. Because of the problems in the real estate market, maybe this thinking has changed. One would probably buy a home in need of repairs and/or upgrades and then renovate it to suit their tastes.

In my case, I can perform simpler upgrades, mostly of the cosmetic or minor improvement type.
Anything "heavy duty" would have to be contracted out at my expense.
Examples include constructing an outside deck, installing hardwood floors, replacing worn/dirty carpet, redoing a bathroom/kitchen (functional upgrade not cosmetic), replacing roof, or repair/replace cracked steps or chimney.
So therefore, I would use the estimated cost of these functional upgrades as a negotiation point in an offer.
For a full DIY handyman supplying the labor, the situation would be very different.
As background, the home I've lived in since 1984 was in decent "move in" shape but needed some serious functional upgrades on the outside. Each was done over the years as money was saved. All upgrades were contracted out.
My home is in the best shape (functionally) of all of the homes near me, all built at the same time. So I feel pretty comfortable that some of the money spent over the years will be recouped when I sell it.
Some data...
Construction date: 1977
Purchase price: $63K in 1984
Current assessment (school taxes): $186K

 

[Amethyst]

It's entertainment, that's why. Some people are suckers for house porn. I'm not really sure why, but I'm also not sure why people watch "reality" shows, which aren't about reality.

Amethyst

They do it on almost every show and the viewers eat it up....
.

 

[bbbamI]

And I'm in agreement will most everyone that's posted, for the most part a renovation is done for the homeowners, not for resale value. With that being said, how to these home reno shows get away with saying, "this house is worth $60,000.00 more with a kitchen bath reno". They do it on almost every show and the viewers eat it up....

Thank you for your comments.

Here ya go....

It's entertainment, that's why. Some people are suckers for house porn. I'm not really sure why, but I'm also not sure why people watch "reality" shows, which aren't about reality.

Amethyst

Yep....and sales. What commercials are ran during the programming...?

Bucks baby......

...oh and My Dream...you did a wonderful job on your reno.