Home improvement: Does cost vs. value really matter?
Cost versus value. As remodeling contractor, many times I’ll talk with a perspective client about a remodeling project and they’ll ask “cost vs. value” question. It sounds something like this, “How much will this increase the value of my home”? Or, “How much will I get back when I sell?”
Other times, I get cost vs. value statements like “We don’t want to over-improve,” or “We’ll never get our money back.” The truth is, who cares? When you purchase a car, do you make the buying decision based on what you expect the trade-in value to be in five years?
Your home is not a mutual fund. Don’t expect your home improvement project to yield a higher than average return on investment. As a licensed real estate broker here in Wisconsin, I have studied cost vs. value reports until I’m blue in the face and, honestly, the margin of error exceeds any possible fair validation of the price of a given home improvement project.
As a seasoned professional in the design-build remodeling business, I would offer any homeowner the following advice when it comes to making cost vs. value comparisons: Consider the project. If you are adding a dedicated home theater or a five-person sauna as part of your remodeling project, it pretty much stands to reason that these types of amenities are user specific. This doesn’t mean you won’t get a fair portion of your investment back should you decide to sell, but it does limit your prospects.
As a general rule, if your existing kitchen or bath is low-quality, severely worn or extremely dated, an investment in remodeling will most likely be recovered when the house is sold, provided that the rest of the home is up to par. Trendy projects are all the rage when new, but usually become quickly dated. An experienced designer should be able to offer advice if they are given accurate information on budget, desired outcomes and how long the client plans to stay in the home.
When considering a home improvement project that’s tempered with a cost vs. value analysis, also consider that doing less than what you really desire can make the project a total loss. For example, if you decide to update only your kitchen countertops out of fear you won’t recover financially from a full-blown kitchen remodel, you may not only lose the cost of the countertops but drown in disappointment for the remaining years you live in your house.
Home improvement projects are also typically life improvement projects. With proper planning, logical budget approach and a quality contractor, your outcome should be financially sound and increase your quality of life. For most people, the home is their biggest, longest-term material investment. In most cases, you can’t go wrong when investing in your home. One last thought: Do you ever wonder how much money Rockefeller left behind when he died? All of it!
Kerzner Remodeling and Construction, an Oconomowoc, Wisc-based design-build remodeler that serves clients in the Milwaukee area. Also known as “Nick the Construction Guru,” Kerzner also offers home improvement and remodeling advice for homeowners Sunday mornings on WISN AM 1130.
As of March 26, 2013, this service provider was highly rated on Angie's List. Ratings are subject to change based on consumer feedback, so check Angie's List for the most up-to-date reviews. The views expressed by this author do not necessarily reflect those of Angie's List.