Which home improvements give the best payback  when selling?

If you’re thinking about remodeling your kitchen, or finishing your basement, you probably want to get your investment back when you sell your home. But when it comes to payback value of home improvements, some are definitely more profitable than others. Generally, returns of 90% or more are experienced with kitchen and bathroom projects. On the other hand, projects which generally have the lowest return are room additions or basement finishing.  Returns for basement finishing usually are less than 50%, so it’s not a project likely to show profit come time to sell.  

Returns are generally determined by a number of factors. Current conditions in the marketplace can have a dramatic effect on the returns experienced.  If the market is hot and homes are selling fast, you can expect a higher payback value than you would get in a slow market.  

The type of project you do and how it fits in with other homes in the area can have a big influence on payback too. If you put your money into the wrong type of improvement, you won’t get your money back. But if you're smart about what you do, you can make money. The payback will be better on improvements that are in demand and conform to neighborhood standards. Adding a second bathroom in a neighborhood where most homes have two bathrooms will give a high return on investment.  Building a large addition that makes your home twice as big as the other homes on the block probably won’t pay back very well. Likewise, the popularity of a project will factor into how much it pays back. An improvement heavily customized to your wants and needs won’t pay back as well as something more common to other homes in the neighborhood.

Another factor to consider is the cost of the improvements. If you can do the work yourself, you can save significantly on the cost of the project and greatly improve the chances of getting a good return on the investment.

If you are thinking of selling, and possible renovating in order to get the highest return, please give me a call to discuss.  I can help you analyze the pros and cons associated with this, so that you can make an informed decision on what is best for you.