If you had to guess the home renovation projects that add the most value to a house, you’d probably say “kitchen remodel” or “new bathroom,” right? In all likelihood, “fiberglass attic insulation” wouldn’t be at the top of your list. But, as it turns out, that is the project with the greatest return on investment, according to Remodeling magazine’s 2016 Cost vs. Value Report. The estimated cost to install attic insulation is $1,268; meanwhile, that improvement adds an average of $1,482 to a home’s value, for a whopping 117 percent return.
If you’re planning to do work on your house with an eye toward selling, consider each project’s cost versus value ratio. Other high-yield improvements include replacing the bottom third of siding with stone veneer (93 percent return), garage door replacement (92 percent return) and steel entry door replacement (91 percent return). And, if you answered “kitchen remodel” to the question above, you were in the ballpark. Minor kitchen remodels have the fifth-highest cost versus value ratio (83 percent), according to the survey.
In spite of what Remodeling magazine’s data shows, North Shore realtor Kati Spaniak ranks kitchen and bathroom updates at the top of her list of value-adding projects.
“But you don’t need to renovate them expensively,” she adds. “You can do it on a budget. A lot of times, just painting the cabinets, if they are good quality, is almost like remodeling the kitchen.”
Spaniak cautions homeowners to be very strategic about how they spend money to update kitchens and bathrooms. To make sure your planned remodel has solid resale value, she recommends consulting with a trusted realtor. You’ll have a hard time recouping your renovation dollars if you don’t choose styles and colors (think grays and neutrals) that appeal to younger buyers.
“If you spend $10,000 on new countertops for the kitchen and new tile for the bathrooms, the buyers may decide that it’s not the color or the style that they are looking for and will take the house off their list unless the price is drastically reduced,” Spaniak says.
Spaniak does agree that a quick-hit project like a new front door is a smart choice to add resale value because it is relatively low-cost but makes a big first visual impression on buyers. “The most important things are ones that can be seen when you are going to sell your home,” she says.
Winnetka @properties realtor Laura Fitzpatrick says that in her experience, many buyers are attracted to huge kitchen islands, mudrooms, second-floor laundry, and master bathrooms with double sinks and roomy showers. With regard to Remodeling magazine’s report, Fitzpatrick says Chicago and North Shore homeowners can expect to pay higher prices for renovations because construction costs are steeper in major metropolitan areas. And, she says North Shore homeowners in particular should avoid cutting corners when remodeling.
“Homeowners on the North Shore tend to choose higher-end finishes and demand higher-quality products; however it does generate a higher price on a sale,” Fitzpatrick says. “It’s easy to tell low quality versus high, and North Shore buyers are savvy, well-educated buyers who will see the value in a good-quality remodel.”
If you’re doing work on your house in preparation to sell, Winnetka realtor Carrie Nadler Healy, with Jean Wright Real Estate, reminds homeowners to take care of eyesores that might distract potential buyers.
“If one is making improvements for the purpose of selling, a good neutral coat of paint is always nice to freshen things up,” she says. “Replacing of old, worn carpeting helps to eliminate any red flags and lets the buyer concentrate on the more important improvements they will want to make.”
As much as many homebuyers say they’d like more space, few seem willing to pay a premium for it, according to the Remodeling magazine data. The average cost of a master suite addition is $115,810, but the resale value is just $74,224 (64 percent return). Similarly, sellers only recoup an average of 68 percent of the cost of a family room addition and 56 percent of what they spend to add a bathroom.
“Don’t put tens of thousands of dollars into the home for additions unless you know exactly what the outcome is going to be. Typically, you will not get that out in the sale of the home,” Spaniak says. “However, if you are creating an addition because YOU want to use it, then it is worth it for you. But don’t build an addition for resale purposes only.”
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