Kitchen Remodels Offer Big Paybacks at Resale

Realtor Magazine  |   September 28, 2017

Homeowners looking for a remodeling project may be smart to tackle a kitchen renovation—that is, if they’re looking for projects with the strongest buyer appeal and high returns on their investment at resale. Read more: Home Renovations That May Not Be Worth It Kitchen renovations and upgrades are among the top remodeling projects most likely to add value to a home at resale and most likely to appeal to home shoppers, according to the 2017 Remodeling Impact Report, conducted by the National Association of REALTORS®. The report takes a look at the cost of the most common exterior and interior remodeling and replacement projects and gauges how much appeal they have to buyers at resale. Fifty-four percent of REALTORS® surveyed reported suggesting to sellers that they complete a kitchen upgrade before attempting to sell. Twenty-three percent of real estate pros also said a kitchen renovation helped to close a sale. The Remodeling Impact Report estimates that homeowners stand to recover 57 percent—or $20,000—of the $35,000 or so of the cost to take on a kitchen upgrade. The kitchen upgrade might include adding new energy-efficient appliances, sink, faucet, and vinyl flooring; repainting the walls and ceiling; and refacing cabinets with cherry veneer and new hardware. Kitchen upgrades don’t just offer the potential for some bang for your buck at resale but also have been found to make homeowners more happy. Eighty-one percent of remodeling consumers surveyed said they had a greater desire to be at home since completing their kitchen upgrade project, and 81 percent felt a major sense of accomplishment after the renovation. The following interior projects REALTORS® ranked highest to lowest as remodeling projects that would appeal to home buyers (listed along with project estimate costs and the potential return on investment at resale): 1. Complete kitchen renovation Cost estimate: $65,000 REALTORS® estimated cost recovered: $40,000 Percent of value recovered from the project: 62% 2. Kitchen upgrade Cost estimate: $35,000 REALTORS® estimated cost recovered: $20,000 Percent of value recovered from the project: 57% 3. Bathroom renovation Cost estimate: $30,000 REALTORS® estimated cost recovered: $15,000 Percent of value recovered from the project: 50% 4. New wood flooring Estimated cost: $5,500 REALTORS® estimated cost recovered: $5,000 Percent of value recovered from the project: 91% 5. Add new bathroom Cost estimate of project: $59,000 REALTORS® estimated cost recovered: $29,750 Percent of value recovered from the project: 50% 6. Hardwood flooring refinish Estimated cost: $3,000 REALTORS® estimated cost recovered: $3,000 Percent of value recovered from the project: 100% 7. New master suite/owners’ suite Cost estimate: $125,000 REALTORS® estimated cost recovered: $65,000 Percent of value recovered from the project: 52% 8. HVAC replacement Estimated cost: $7,475 REALTORS® estimated cost recovered: $5,000 Percent of value recovered from the project: 67% 9. Basement conversion to living area Cost estimate: $40,000 REALTORS® estimated cost recovered: $25,000 Percent of value recovered from the project: 63% 10. Closet renovation Estimated cost: $3,750 REALTORS® estimated cost recovered: $2,000 Percent of value recovered from the project: 53% 11. Insulation upgrade Estimated cost: $2,100 REALTORS® estimated cost recovered: $1,600 Percent of value recovered from the project: 76% 12. Attic conversion to living area Estimated cost: $75,000 REALTORS® estimated cost recovered: $40,000 Percent of value recovered from the project: 53%

Source: Realtor Magazine