Home Selling in 55126>Question Details

Kris, Home Seller in 55126

First time homeowner - Remodel or not ? Need your expert insights.

Asked by Kris, 55126 Wed Apr 9, 2008

Our townhome is estimated at $185000 (bought it for $175000 in 2003). We plan to stay for in the house for few more years. We were wondering whether to spend $20000 to remodel the kitchen or not. The kitchen remodel (per various sources) return on investment is about 74%. However, based on what some houses in the neighbourhood bwere priced at, post remodel our house might start looking pricey. How do I go about making this decision. thanks !

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Hi Kris,

To reiterate some of what's been said, you need to consider whether you will enjoy the upgrades first and foremost. Don't do it if you're first question is whether you'll get your money back. If that's your first question, you're doing it for the wrong reason.

Also, $20K on a house valued at $185K seems a little steep, maybe try scaling it back a bit. Also consider the rest of your house. If the entire house is outdated, spending money on the kitchen alone will not give you much of a return on your investment.

Ulitmately do it for YOU!
1 vote Thank Flag Link Wed Apr 9, 2008
Kris,


**..per various sources..**

Always one of my favorite issues - who, what and where is the question ....

If, you're happy with the current kitchen .. then leave it alone.

Lets say in 2 years, when you're 6/8 months away from putting it on the market, that's when I would start *looking* at prices and materials seriously ...

If you're a good and savvy shopper, you don't need to spend $20,000 or anything even close to it ...

Wait til' late fall or winter ... most of the construction guys are off work and will work for a very discounted rate .. shop for all of your materials and appliances, we just bought a 24ft s/s energy saver refrig, regular price $2,100 - we paid $675 at the scratch and dent sale (who looks at the sides.? .l.o.l..) ... we just added 60 sq ft of granite to a house we own, everyone else pays $4,800 .. we paid $2,800 with a 18 gauge triple sink and the fancy faucets(installed) .. we'll spend $2,500ish on new 42 inch cabinets, and with a this and a that, we'll have spent maybe $7,500ish with the labor - maybe ...

Expensive kitchens don't sell homes .. they just make them much more marketable and they sell quicker and much faster ... $20 grand spent might bring you $10 grand - thats why I don't spend $20 grand.

Sincerely, good luck and happy hunting.!


: ^)
2 votes Thank Flag Link Wed Apr 9, 2008
Kris,

I would have to agree with Deborah below. When remodeling your home you need to understand that in todays maket you will not be getting a solid ROI. You really need to look at how long you are planning on staying in your home. It sounds like you only want to live in this home for a few more years. If that is the case then you will want to be very cautious about how much money you spend and what you do to update your kitchen. I also agree with Deborah in the fact that you should do some research or contact a realtor to get a better idea of what your neighborhood calls for in upgrades. Stainless steel, granite, etc......... I would imagine that if you are in a townhome you don't need to have really expensive upgrades. Good luck and if you need more tips on remodeling a kitchen visit my web reference below.
2 votes Thank Flag Link Wed Apr 9, 2008
There are two motivations to remodel....
1) Financial gain
2) Personal use and enjoyment

If your net position from the remodel was a negative - i.e. You invested 20k, and you estimate that the value of the property increased 15K, is the personal value worth it?

There are times a seller makes a decision to invest in a home improvement to make his/her propety more competitive. Will your property sell faster, if it is updated? What will the financial benefit or drawback be if your property sells quickly or takes a long period of time to sell? i.e. If you carried a mortgage payment for 6 months extra,especially if the property was vacant, how would that expense compare to a net loss on the improvement investment.

Keep in mind that the return on investment figures quoted by various sources are only a guideline based upon averages. Your particular property may yield an ROI which may be above or below that benchmark.

I showed property in a neighborhood last week where corian and formica counters were common. The homes were in great area, and represented the top 20& of that market. Applicances were Maytag, Kenmore, and the GE Profile appliances were touted as 'tops" for the area. If I were in a different neighborhood, only granite, Viking and Subzero would have been expected. Your choices will need to be consistent with market demand for the area in order to make the most of your investment.

Gain a comprehensive understanding of the demand factor and find the balance between what you personally desire and what is a safe a viable home improvement investment.
2 votes Thank Flag Link Wed Apr 9, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
Dave here again. I forgot that the information is available on line at
http://www.remodeling.hw.net/content/CvsV/CostvsValue-projec…
This will give you 2006 numbers and you can find costs and resale value in your part of the country for 25 different projects. It's a great resource.

Dave
1 vote Thank Flag Link Thu Apr 10, 2008
I couldn't get the link to CNN tools in Sandy's answer to work. Try
http://cgi.money.cnn.com/tools/renovation/renovation.html

Any good Realtor should be able to show you the NAR study done every two years that provides the rate of return for a variety of remodeling projects, including kitchens, broken out by 60 or 70 different cities around the country. The last one was in the 12/06 issue of Realtor Magazine. I don't know where you are in the country, but for what they call a "minor" kitchen remodel (and that's defined in the magazine) the national average cost is $17,298 and returns 86% on resale. If you're in San Francisco, $20,424 and the return is 126% - in Cleveland it's $18,712 and returns 54% (those are the extremes for return percentage).

I agree that the first consideration is your personal enjoyment.
1 vote Thank Flag Link Wed Apr 9, 2008
My input would be to go check out some of the neighboring homes on the market; see what they have for the price. You'll find your time is well worth it. Those homes were priced after a CMA was performed which shows value based on comparibles per that specific neighborhood. Check how fast homes are selling and at what price. See what the amenities were in the homes that sold. If you can find a realtor who can provide these stats to you it will be much easier for you to make a decision.

I have a Property Investment Profile which gives a report of stats of homes that are for sale, pending, and have sold -per a radius around a specific street address and details of the homes- this report is free and available to anyone within my MLS range. This, along with another fantastic report called Market Tracker helps folks to track value as you watch what's happening in your neighborhood on these monthly reports. The Market Tracker also shows a 3 year trend. See if anyone is your area is providing these helpful services. An address and an email address is all that's needed to get it going. If you were here in Oregon I'd be happy to assist!
Web Reference: http://www.junelizotte.com
1 vote Thank Flag Link Wed Apr 9, 2008
Kris,

Check out the CNN money website. There is a special section on whether your home renovation will pay off
http://cgi.money.cnn.com/tools/renovation/renovation.html.

Good luck!
1 vote Thank Flag Link Wed Apr 9, 2008
Kris,
You won't be able to get that much of your money back out. With townhouses you never want to list for more then a few thousand over your neighbors, tops. Maybe it would be better to just buy new appliances and update the floors, countertops. You should be able to do that for closer to $10,000. Don't go too upscale on a 185k home.
1 vote Thank Flag Link Wed Apr 9, 2008
Your asking a question that even a year ago may have generated a different answer. My suggestion, be careful on what you decide to do in your home in this current market. Your location, what the market is like in your particular area, what is the price range that the homes are currently selling for. Your doing a wise thing in asking experts to give you advice. My experience tells me that it is hard to recoup an investment like this in our current market. Maybe scale it down a bit.
0 votes Thank Flag Link Thu Jun 5, 2008
Hi Everyone,

I noticed that the URL Sandy provided isn't resolving to the intended site correctly. It looks like the period at the end is the cause, but the link does work. Please access it from below my post here.

Best Wishes,

Emily Gibson
Customer Service Representative
0 votes Thank Flag Link Thu Apr 10, 2008
Hello to Remodel or not?
Right now it's a buyers market! With short sales and bank ownedeproperties at an all time high, there really is no sense in adding money to your home, when you can buy at great prices today (2nd quarter of 2008). Connect with an agent in your market today, and they should be able to direct you to newer homes with kitchens that more than meet your needs. If you can rent your home out, and with decent interest rates today, you may be in a win-win situation with new property!
0 votes Thank Flag Link Wed Apr 9, 2008
Kris--
You will never lose money in a kitchen re-mod; no matter how the market slides, it is like putting money in the bank. Why? Kitchen re-dos are at the top of buyer favorite things, you get to enjoy it while you stay in your TH and the yeild on such an investment just cannot be duplicated when it comes to re-sale. Call your contractor now--you'll never regret it.
0 votes Thank Flag Link Wed Apr 9, 2008
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