Are you eager to renovate parts of your home but aren't sure which projects will actually add value to it? Before you start ripping out walls or buying expensive faucets, learn which remodeling projects can actually pay you back when you decide to sell.
Homeowners across the country are trying to increase the value of their homes through remodeling projects.
In fact, 30 percent of homeowners say their main reason for a home remodel was to increase the value of their home, according to an October 2011 national survey of homeowners and renters, commissioned by Hanley Wood LLC, a media and information company in the housing and construction arena.
But just what is a home renovation worth?
"Everything you do to improve your home can add some value," says Steve Melman, director of economic services for the National Association of Home Builders in Washington, D.C. But Melman adds an important caveat: "Paybacks for remodeling have been falling, just like the price of homes," so it's important to know which projects will give you the most bang for your buck.
Fortunately, there are certain remodeling projects that could pay off big down the road. Keep reading to learn more...
Remodeling Investment #1 - Replace Siding
One of the top remodeling projects for adding value to your home isn't anything too complicated or arduous. It's as simple as replacing the siding on the outside of your home.
Just like we dress for success on job interviews, your home needs to make a good first impression on potential buyers when they see it from the street. In the real estate world, this is called curb appeal.
In fact, if you replace your exterior siding with fiber-cement - a composite material made of sand, cement, and cellulose - your home could recoup 78 percent of the average nationwide cost of the project, $13,641, according to a 2011-2012 "Cost vs. Value Report" conducted by Remodeling magazine.
If you want to shell out a little less, try vinyl siding, which costs about $11,729 and has an average recoup percentage of 69.5. Foam-backed vinyl siding is also available for a similar recoup value, though it comes with a higher price tag of $14,274.
Seven of the top 10 projects in Remodeling's report are classified as siding, window, or door replacement. These projects cost less than $19,000 and boast an average cost-to-value ratio between 69 and 78 percent. Clearly, making a home's exterior look good can entice more potential buyers to see what else it has to offer.
Remodeling Investment #2 - Replace Old Windows
Want to make a great remodeling investment in your home and feel good about it?
Updating your windows could be the answer. Whether you select vinyl or wood windows to replace drafty old ones, you can recoup up to 69.1 percent of the project's cost on your home's resale value, according to Remodeling's "Cost vs. Value Report." Window replacement costs average from a low $11,000 to $19,000.
New windows do so much for the look of a home inside and out, and as Melman points out, they make cleaning a breeze (pun intended).
"I have a 90-year-old home with old windows," says Melman. "When you try to clean them, the ropes that lift them up usually break. It's a pain, and they aren't insulated like the new windows." If this scenario sounds all too familiar, you're not alone.
According to the Hanley Wood survey, "More than half of the nation's 76 million owner-occupied homes were built prior to 1970." That means there are a lot of old windows out there that need some serious TLC.
Remodeling Investment #3 - Install a New Roof
Frosting on a cake - it's what buyers see when they drive up to a home with a brand-spanking-new roof.
If missing roof tiles are making your home look like it's seen better days, it might be time to invest in something new and attractive that could pay back more than half of the construction costs.
An upscale new roof using standing-seam metal can be quite costly, demanding a $37,481 price tag on average, and only paying back 54.5 percent of its cost at resale, according to the Remodeling magazine report. However, a less expensive roof update could give you an even larger cut of the pie. In fact, fiberglass asphalt shingles cost approximately $21,000 and offer 57.8 percent of the cost back in increased home value.
And with new roofing innovations, finding materials that are effective - yet affordable - is easier than ever.
"Manufacturers are coming up with new materials all the time for roofs that help with energy costs and noise reduction, plus they are less costly," adds Melman. You can select metal or asphalt shingles or even composite materials, which look like slate without the big price tag.
Remodeling Investment # 4 - Replace Countertops
If you don't have money for a complete kitchen remodel, replacing your old countertops won't break the bank. Plus, new countertops could update the entire room and add great value to your home.
According to Remodeling magazine's survey, even a minor kitchen remodel - including replacing the countertop, sink, faucets, wall oven, and cooktop - costs on average only $20,000. The payback? Up to 72.1 percent of the project's cost could be covered by your home's increase in value.
And the options are virtually limitless. "You only had one or two choices in countertops 20 years ago. Now you have 500 choices," Melman says. "Granite is still the most popular. But there are new kinds of engineered concrete, soapstone, quartz, and other materials that can add value to your home."
It's really up to you how fancy you want to make your countertop. On the low end, laminate could cost as little as $10 per square foot, while more premium materials could be 10 times that, according to Consumer Reports. Beveled or other types of different shaped edging will up the price an additional $10 to $50 per linear square foot.
Remodeling Investment #5 - Reface Kitchen Cabinets
Why put in $100,000 into a kitchen remodel with custom cabinets if you can't get that money back when you sell your home? Good news: there are less expensive ways to spruce up your cabinets, and they offer a greater cost-benefit, too.
Just consider that a thorough refacing project, or semi-custom cabinet remodel, could cost about $9,000, according to Consumer Reports. Now, that's a lot less than $100,000.
Cabinet refacing is a quick, affordable, and relatively hassle-free alternative that can completely transform a kitchen, adding instant beauty and value. Instead of ripping out all of your cabinets and starting from scratch, professionals can replace cabinet doors and drawer fronts and apply veneers to face frames and ends.
"I have someone coming in to reface my old cabinets," says Melman. "They are taking off the doors and changing them out along with the knobs. It will make it look like a brand-new kitchen."
Remodeling Investment #6 - Upgrade the Bathroom
When it's going to take more than just a can of paint to fix up your old bathroom, it's time to consider a more substantial remodel. A clean, bright, and remodeled bathroom attracts just about everyone - including potential buyers.
A midrange bathroom remodel will cost on average about $16,552, according to Remodeling magazine's survey. But by replacing old fixtures, floors, sink, toilet, and bathing area - with something more modern - you could reap great rewards from the money you spend. In fact, about 62.2 percent of those costs could go back into your pocket when you decide to put your house on the market.
"Bathrooms can be a lot less expensive to remodel than a kitchen," says Melman. For example, instead of many cabinets to replace, you only have one. Plus, kitchens have larger floors and more appliances to buy, whereas bathrooms are usually simpler with small floors.
Remodeling Investment #7 - Add a Deck
Want to have more barbeques and summer parties, and add value to your home while doing it? Then it's time to extend your living space into the great outdoors with a warmly inviting deck.
But just how much value could it add?
According to Remodeling magazine's "Cost vs. Value Report," a wood deck costing $10,350 could repay you 70.1 percent of the project cost once the house sells. Decks made of a composite material can cost about $15,579 with a 62.8 percent payback.
While they may cost a little more, the composite decks are definitely the trend now, says Tom Reinhofer, co-owner of Georgetown Decks and Construction in Vernon Hills, Ill. "Ninety-nine percent of the decks I design and build are with composite," he says."These things are stain and fade-resistant."
This last point is a key one for Reinhofer, as paying for annual maintenance on a wood deck adds up over time.