“Wait, I think it’s backwards.” was my wife’s reaction when I showed her the summary report I put together of Remodeling.net’s 2019 Cost Vs Value Survey regarding the average cost to complete a home improvement project vs. what the supposed return on investment is. With every remodeling project listed as more expensive than what it will return on resale value, it’s not hard to understand her mistake.
With the 2019 release of Remodeling.net’s Cost Vs Value report, one thing has become apparent to me; Americans are getting hosed. Some of the numbers they are quoting are on the verge of hysterical! I seriously have to wonder if Remodeling magazine has a secret agenda of setting ridiculously high expectations on project costs so when your general contractor gives you some off their rocker quote you think: “Hmm…that’s not as bad as I thought it was going to be.” Here are some of my favorites:
Master Bedroom Addition (High End): $265,454
$265K AVERAGE cost to add a high end master bedroom. Are you kidding me?!? All I can think is that there must be a bunch of general contractors driving Porche’s around with “MstrBed” on their custom license plates.
Of course there are scenarios with historic homes where you have to pop the roof, change the exterior etc… where an addition could cost that kind of money but people, you can build an ENTIRE HOUSE for that kind of money…use some common sense!
If you are looking at numbers like that, you probably should just move unless there is a compelling reason not to. The lost value of Cost vs Resale (estimated at over $134,000!) would pay your Realtor fees, moving expenses, and probably contribute partially to your down payment of your new and bigger home!
Bathroom Remodel (Midrange): $32,731
$32K for a mid range bathroom remodel? Like, it was already there?…and you just changed some fixtures, cabinets, the toilet, and tile (maybe got crazy and got rid of the avocado green tub?) Seriously? You should be able to finish a small basement for that type of money.
I could take almost every single line item and have a field day but lets get to what you should do.
Should You Remodel? YES!
YOU NEED to update your house to keep up with market preferences. It will make a huge difference in the sale-ability of your home if you ever need to sell. More than that, YOU WILL ENJOY your home more!
EVERY. SINGLE. TIME. I work with clients to get their home market ready, they finish the projects and say “Gosh, we should have done this years ago, now we don’t want to move.” I guess it’s my own little version of “Love It Or List It”.
Tips To Make Smart Improvements
There are many ways you can keep your costs down or at least check yourself before you start a major project. Here are a few that can help you keep your improvements from being over-improvements.
Check With A Pro
PLEASE PLEASE PLEASE, if you take ONE THING away from this article, this is it. If you have a favorite Realtor that you know and love, check with them before you take on any major projects. If you add a $265,000 master addition or a $130,000 kitchen remodel to a track home in Briargate, you will not be pleased with your return on investment.
Your realtor can give you real world insights and opinions on how your renovations will help or hurt your homes’ value. Remember, we walk through 100’s of homes per year so we might even be able to give you some great or creative ideas or resources to get the job done!
Here’s my free tip: I don’t know what Colorado herb this magazine is smoking but a $30K return for a new patio is highly unlikely.
Be Your Own Subcontractor
As a homeowner, you can pull your own permit and be your own general contractor. If you hire the plumber, electrician, and tile guy for your bathroom remodel and pick up your fixtures at your favorite home improvement store, you can renovate for a FRACTION of what this report quotes.
If you do this, you might be tempted not to pull a permit. PULL THE PERMIT! Permits are required anytime you are making any changes that have to do with electrical, plumbing or structural because those changes could burn down, flood, or make your house fall over. The city wants to ensure changes are made correctly and you should too…so don’t cut corners.
Check The Return Against The Cost
So you don’t want to be your own subcontractor and you don’t have a favorite Realtor to check with about an upcoming project? Use the RESALE numbers in this report as your common sense comparison test. If you are blowing that figure out of the water, you might want to adjust the scope of your project.
There will always be exceptions where it makes sense to spend more money on home improvements. After all, housing isn’t JUST ABOUT return on investment. You build your life around your home and there may be amenities that you want because you want them and that’s ok! It’s the American way.
Home improvement doesn’t always have to make sense. But at least now you have some tools to make smarter bad decisions. 😉 So if that’s the case, go wild! Send your contractor’s kid to Harvard or help them buy that bright orange Lambo they’ve had their eye on. At least you knew ahead of time.