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Which Home Improvements Pay Back?
Recouping your remodeling investment may be your goal when you sell your house. But
when it comes to resale value, all home improvements are not created equal. As a rule,
kitchen remodeling projects and bathroom additions almost always pay back 90% or more
of their costs. However, finishing a basement usually pays back less than 50 percent.
Other improvements fall somewhere inbetween. Consider these payback estimates for the
most typical home improvement projects:
| Project |
Cost |
Average Payback |
| Add a new heating or air conditioning system |
$2000 to $4000 |
100% for heating; 75% for air conditioning |
| Minor kitchen remodeling |
$2000 to $8500 |
94% to 102% |
| Major kitchen remodeling |
$9000 to $25,000 |
90% |
| Bathroom addition |
$5000 to $12,000 |
92% |
| Familyroom addition |
$30,000 |
86% |
| Bathroom remodel |
$8500 |
77% |
| Add a fireplace |
$1500 to $3000 |
77% |
| Build a deck |
$6000 |
73% |
| Home office remodel |
$8000 |
69% |
| Replace windows |
$6000 |
68% to 74% |
| Build a pool |
$10000 and up |
44% |
| Upgrade landscaping |
$1500 to $15,000 |
30% to 60% |
| Finish basement |
$3000 to $7000 |
15% |
Understanding payback value
Payback value depends heavily on the real estate market and prevailing
property values. If the market is slow, expect to see less payback than
you would in a fast market. Also,
consider the neighborhood: If you remodel your house to twice
the size of other homes on the block, it is unlikely that you will be
able to sell it at double the price.
Issues that can influence payback include:
- Type of improvement
Kitchen and bathroom remodeling projects consistently return
the most in resale value and almost always help sell a house. Converting
a basement into a family room
yields the smallest return on the investment.
- Scope of improvement
Projects can be large or small. Sometimes the cumulative
effect of small projects can pay back more in resale value than that
of larger projects. Small projects
tend to be cosmetic in nature: fresh paint, new doors, garden
windows, and ceiling fans. Large improvements involve adding or upgrading
living space.
- Desirability
Today's fad may be tomorrow's standard. Backyard decks, for
example, were difficult to find 30 years ago; now they are common. Decks
may not have paid back very much
in resale value decades ago, but as decks have become more
desirable, their resale value has increased.
- Cost
The price of home improvements fluctuates depending on economic condition and region.
If remodeling costs are particularly high in your area (or home sale prices particularly
low), you may not recoup as much on your investment as you would if costs were in sync
with sales prices.
On the other hand, adding a bidet in your master bathroom probably won't do much for your resale value
but, hay, it's your house, if you want one, do it!
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