On the surface it seems like an easy question to answer. There are several groups that compile data and try to give all of us answers to those questions. For example, check out this information from Remodeling Magazine. Being in the Seattle area though, I like to look at the data that is specific to Seattle. If you recoup less when you sell the house than it cost to do the remodel don't do it. If you recoup more when you sell the house than it cost to do the remodel then do it.

 

Like I said, easy, right?

 

Of the 22 mid-level projects they surveyed (35 if you include the upscale projects) only one of them recouped more money than it cost to do the remodel in the first place. All of the other projects were money losers. In fact, two of the projects, Sun Room Addition and Home Office Remodel, returned only 43.6% and 43.7% of the cost, respectively, for the Seattle area.

 

Here's some more scary numbers for you. Nationally in 2010 the average remodel only recouped 60.0% of the cost of the remodel itself. That is the lowest value since 2006 when the turn downward began. While the cost to remodel is down 10.4% the estimated resale values are down even more at 15.8%. 

 

So, surely the cost vs. value of doing a remodeling project would indicate NOT to do the remodel, right?

 

Well, you know I wouldn't be writing this and asking that question in just such a way to throw you off if I didn't think the opposite was true. I'm not saying that you need to go and do every possible remodel to your house. You still need to pick and choose wisely but I think there is more to it than just the numbers on the cost vs.  value report.

 

You will note that each of the projects that are suggested as wise remodel choices (you have to scroll about half way down the page) have huge effects on the buyer's first impressions on the beauty of the house. The top three are even exterior projects that lead directly to increased curb appeal, the holy grail of house selling.

 

Folks, selling a house is a beauty contest out there. The days of any and every house, the cute, the ugly, the charming, the mansion, or whatever, selling for over asking price are clearly long gone. Today there is enough inventory on the market that if you are looking at an ugly house in your price range all you have to do is go around the corner to find a beautiful house at the same price, if not lower. I can assure you that the more beautiful of two houses at the same price will sell first.

 

An ugly, not remodeled house sitting on the market unsold costs money. There's mortgage costs, utility costs, insurance costs, maintenance costs, not to mention the possibility that we are still in a declining market and the value of that house is ebbing away every day. A three month wait could easily cost $10,000 or more in the Seattle area. With that in mind, suddenly the thought of doing that garage door replacement with a less than $300 differential in cost vs value sounds a little more enticing.

 

Additionally, since they can't sell the same house twice, with and without the remodel, the value data is based on 3000 surveys of value that were sent to agents, brokers, and appraisers throughout the country. I have to tell you, while I did not participate in the study this year, I can understand why the resale values were estimated to be 15.8% lower than last year. Quite simply, it's been that type of year. I am so accustomed to beating both my buyers and my sellers down in price that it is almost second nature. With all that we have been through, it's no surprise that agents, brokers and appraisers are struggling to see the value in anything. But that doesn't mean that the value isn't still there. With that said, my first point is that much more important. It costs money to own a house sitting on the market unsold and I can guarantee you that every agent or broker representing a buyer will justify the value of an improved house over an unimproved house regardless of what exact value any one agent places on a remodel.

 

So, should you make plans to do that remodel you have thought about for the last few years? Well, call me or email me. Let's look at the numbers and work it out.