It’s a real estate cliché: Remodel the kitchen and master bathroom for a quicker sale at a higher price. However, siding replacements and other simple projects may offer an even better return on investment.
Hanley Wood issues the annual Cost vs. Value report, which surveys members of the National Association of Realtors about the changes in anticipated resale value based on specific remodeling projects. According to the report, a wood deck addition brings the greatest boost in resale value — often for less than $10,000.
Ben Maxwell of Dovetail Homes agrees. Dovetail works on both whole-house remodels and smaller projects in various price ranges throughout the metro area. “Creating an outdoor living space is huge,” Maxwell said, adding that either a front patio or backyard deck can bring a return on investment above 100 percent.
New siding is another relatively inexpensive project with a high return on investment. “If the siding is falling apart, it really dates the home,” Maxwell said.
Both projects will give buyers a good impression before they even enter the house. Denver real estate agent Bill Fung emphasized the value of first impressions. “Make sure the entryway area is bright, clean and uncluttered,” he said.
The Cost vs. Value report’s regional breakdown suggests a $60,000 basement remodel brings a higher-than-average rate of return in the Denver area. Most figures for the Rocky Mountain region match national averages, but roof replacements and basements bring a greater return on investment in the Colorado region than in other areas.
Maxwell disagrees. He said larger homes typically have enough living space on the main levels, and a top-of-the-line basement may be extraneous. Likewise, a large, expensive addition or second floor is unlikely to offer a full payback in resale value. An exception is the addition of a garage to an older home near central Denver, where few homes have enclosed garages.
To be sure, kitchen and bathroom remodels offer solid return on investment — to a point. Expensive custom cabinetry with built-in wine rack and spice holders is unlikely to increase sale values enough to justify the high cost.
Simpler upgrades such as new lighting and plumbing fixtures, on the other hand, can attract buyers and make the difference between weeks and months on the market. Fung said upgrades as cheap and simple as drawer handles and showerheads can make a difference in selling a house.
Maxwell said dark cabinetry, bright paint, tile backsplashes and stainless steel appliances are popular kitchen upgrades in Colorado. He noted that granite, tile and other quality materials show little wear, so homeowners should enjoy their new kitchen or bathroom for a couple of years before selling. Fung also recommends cheap, simple upgrades shortly before selling a house, such as a new closet organizer or shelves, and new doorknobs.
A slumping housing market is certainly reducing the return on investment of remodeling. For example, a new deck generated a 104 percent return on investment in 2004, according to the Cost vs. Value report. The latest report estimates an 82 percent return on investment. Still, a remodel can make the difference between a rapid sale and months of inactivity.
For the full Cost vs. Value report, visit www.remodeling.hw.net
