Report details which remodeling projects have the highest return
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Want to know which remodeling projects will give you the biggest bang for your buck? Look no further than the 2010-11 Cost vs. Value Report from Remodeling and REALTOR® magazines, which details the projects that are likely to have the highest returns when a home is sold.
For 2010, the projects with the highest payoffs were those that improved a home’s exterior, confirming that curb appeal and first impressions really do make a difference when someone is buying a home.
The Remodeling Cost vs. Value Report compared construction costs with resale values for 35 midrange and upscale remodeling projects comprising additions, remodels and replacements in 80 markets across the country. Remodeling magazine gathered construction cost estimates based on commodity and labor costs while local REALTORS® estimated resale values based on their insight into local markets and home buyer preferences within those markets.
For the Salt Lake City area, the project with the highest cost recouped was a steel entry door replacement, with 95 percent of its cost estimated to be returned when the home is sold. In second place was a garage door replacement, which was expected to return 93 percent of its costs. Rounding out the top three was an upscale fiber-cement siding replacement, judged to return nearly 87 percent of costs.
In the official report in REALTOR® magazine, REALTORS® noted that the projects must fit with the style of the home. Replacing a front door, for example, may be more harmful than helpful if it doesn’t complement the house.
For the garage door replacement, REALTOR® magazine said homeowners should be careful when choosing a door to make sure they don't select a more expensive one than is needed. Sellers should also consider how a buyer might use the garage and consider getting an insulated door or one with windows.
The report noted that replacement projects are often better than other types of remodeling projects because they’re among the least expensive and contribute to curb appeal. In fact, all of the top five projects in the Salt Lake area were replacement projects rather than remodels or additions.
Project No. 4 was a midrange vinyl siding replacement (about 83 percent recouped), and No. 5 was an upscale foam-backed vinyl siding replacement (about 76 percent recouped).
The report noted that many of the top projects catered to budget-conscious consumers. The steel entry door replacement was estimated to cost only $1,071 while a garage door replacement would cost $1,166. Compared to other remodeling projects ranging in the tens of thousands of dollars, these top projects require a minimal cash outlay while having the highest percentage of the costs recouped. Weak economic conditions have resulted in higher-cost, upscale projects losing resale value in recent years.
The top interior project in the Salt Lake area was a minor kitchen remodel, which was expected to return about 74 percent of its costs. The addition of an upscale grand entrance also did well, returning 69 percent of costs. The No. 3 interior project was a basement remodel, coming in with about 66 percent recouped.
Although the Salt Lake report followed many of the national trends, the reports were not identical since various regional factors affect the numbers. An individual home's overall condition, availability and condition of surrounding properties can also influence the estimated resale value of a project.
Because resale values vary based on city and neighborhood, it's smart for homeowners who are remodeling with an eye toward resale value to work with a Realtor in their neighborhood to gain insights into what projects are likely to recoup the most when the home is sold. To find a REALTOR® in your area, visit UtahRealtors.com.
By Lerron Little
Appeared in the Salt Lake Tribune and Deseret News December 25, 2010
February 7, 2011 | Share: