Whether you’re looking at remodeling a home you already own, or buying a fixer-upper and reselling it, it’s a good idea to know a little about the ROI of different home remodeling projects. From minor changes like replacing an entry door to big ones like adding a master suite, it’s rare to get 100% return on your home improvement. However, some projects provide a better return than others. Understanding the potential ROI of your home remodeling project and what may influence it can help you make the right remodeling decisions.
Classifications of Remodels
There are different levels of home remodeling. Because the two most common remodels homeowners undertake are in the kitchen and bathroom, let’s look at the two main types of those remodels; upscale and mid-range. When you’re looking at a bathroom remodel and you add tile, granite countertops, and custom cabinetry, that’s considered an upscale remodel. A mid-range bathroom remodel includes cultured marble sink, stock or semi-custom cabinets, and tile floors. Mid-range bathroom remodels cost about 1/3 of the price of an upscale one. The average ROI nationwide for an upscale remodel is about 56% while a mid-range remodel returns 70% according to Remodeling 2018 Cost vs. Value report.
Mid-range kitchen remodels include semi-custom cabinetry, laminate countertops, stainless steel sink, resilient flooring, and energy-efficient appliances. A major upscale kitchen remodel means custom cabinets, natural stone countertops, tile backsplash, commercial grade appliances, undercabinet lighting, and high-end sink. It’s likely that an upscale kitchen remodel will cost twice as much as a mid-range one. The ROI on kitchen remodels isn’t a wide with a mid-range return averaging 59% and an upscale one nearing 54% nationwide.
If the homes in your neighborhood all have granite countertops and custom cabinets, you’ll see a higher return on your investment than if you choose lower priced products. You’ll also likely sell your home faster if it has the type of products buyers are expecting. That doesn’t mean you should always opt for an upscale remodel. You can pick and choose the right options for your neighborhood, preferences, and style.
The other consideration in planning your remodel is looking at how much your home is currently worth and not overspending. The general recommendation for a kitchen remodel is to spend no more than 15% of your home’s value. For a bathroom remodel, the recommendation is about half that.
If you’re considering remodeling with the expectation that you’ll improve your home’s value, it’s likely you will, but be realistic about the return you’ll likely see. For more specific details about various projects and their return, check out Remodeling 2018 Cost vs. Value Report. When you’re ready to start your remodeling project, work with only NARI members to ensure you’re working with a well-trained and qualified remodeling company.