Sometimes Additions Can Be Subtractions

Not all remodeling  projects add
value come selling time

The Salt Lake Tribune -  Lesley Mitchell
Remodeling your home is kind of like buying a new car. Over time, it will be worth a lot less than you paid for it.

That sun room addition? Expect to recoup only about 40 percent of your investment — if you’re lucky. In fact, real estate agents say many home buyers don’t even like these costly additions. What about the time you remodeled and created a home office with all those built-in book shelves? For all your trouble, you would end up getting only about a third of that investment when it came time to sell.

Even among remodeling projects with the highest return on investment, you can expect to recoup only about 83 percent of what you spend on vinyl replacement siding in Salt Lake City, 74 percent on a minor kitchen remodel and about 70 percent on new windows, according to the annual Cost vs. Value report 2010-2011 by Remodeling magazine.

Perplexed? Real estate agents and others in the housing industry aren’t.

"A lot of homeowners are really surprised at how little they can get back on the money they spent on remodeling projects," said Kim Boekholder with Results Real Estate in Sandy. "It can create some hurt feelings when they want to sell and we have to break the news to them that although what they did is beautiful, buyers aren’t willing to pay extra for it."

One of the biggest mistakes homeowners make, Boekholder said, is making changes that don’t have broad appeal. You may like bright yellow walls, but some buyers don’t.

One of Boekholder’s recent listings was a home with purple carpet. Even though it was in great condition, "every single buyer commented on it," she said. "It was a huge negative and cost some offers." Another Realtor had to break the news to sellers who had remodeled their home with an outdoorsy flair that potential buyers were being turned off by wallpaper, bathroom tiles and kitchen back-splash tiles adorned with hunting scenes.

Another myth is that all remodeling projects are created equally — or that the biggest, most expensive projects have the biggest return on investment.

The report in Remodeling magazine, updated annually, shows that simply isn’t the case. Homeowners can expect to see an average return of 64 percent on the investment in a major kitchen remodel, 62 percent return on a two-story addition, 57 percent on a new master suite and only 44 percent on a bathroom addition.


Why such low returns? Many home-improvement projects appeal to only some buyers — some don’t want a fancy kitchen for example, or don’t like the cabinetry and decor that the seller selected. Buyers who have no intention of working at home will find little or no value in a home office addition, and many buyers prefer a deck to a sunroom.

How much a homeowner reaps from an investment varies, based on the overall condition of the property, the neighborhood and many other factors.

Not all projects are done with an eventual sale in mind. Terry Moore of West Valley knows that home values are down in her area, as well as along virtually the entire Wasatch Front. But after living in her home for two decades, she and her husband do not want to move away from neighbors and two adult children who live nearby, including one only five minutes away.

Two years ago, she had her kitchen remodeled and square footage added. Next up is replacing more windows and her home’s vinyl siding.

"We are doing these projects with the intention to stay," she said. "This is the house we’ll die in."

Although how much value any remodeling project will add is uncertain, one thing is for sure. It’s not always the priciest changes that benefit homeowners most when it comes time to sell. A new steel front door or new garage door aren’t the most expensive additions — but they can deliver big results. According to the report, homeowners could recoup 95 percent of the cost of a new steel entry door and 93 percent on a new garage door. Those aren’t the only practical home improvements that seem to score high — expect about 83 percent on vinyl siding and nearly 70 percent for new windows.

Real estate agents say the return on these types of projects is so high because they are maintenance items that are going to have to be done at some point. Buyers place a premium on properties that already have such projects completed.