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Improvements that Payback

What home improvements should you “invest” in?

Thinking about a home remodel, but not sure if you’ll get your “investment” back when you sell your home? Recouping your remodeling investment may be your goal when you sell your house, but when it comes to resale value, all home improvements are not created equal. As a rule, kitchen remodeling projects and bathroom additions almost always pay back 90 percent or more of their costs. On the other end of the scale, finishing a basement often pays back less than 50 percent. Other improvements fall somewhere in between.

Understanding payback value.
Payback value depends heavily on the real estate market and prevailing property values at the time you are selling your home. If the market is slow, expect to see less payback than you would in a fast market. Also, consider the neighborhood: If you remodel your house with an addition to twice the size of the other homes on the block, it is unlikely that you will be able to sell at double the price.

Issues that can influence payback value include:

The type of home improvement or remodel.
Kitchen and bathroom remodeling projects consistently return the most in resale value and almost always help sell a house. On the other hand, while often desirable in homes or any value, converting a basement into a family room yields the smallest return on the investment.

The scope of your home improvement.
Home improvement and remodeling projects can be large or small. Sometimes, the cumulative effect of several small projects can pay back more in resale value than that of one or more larger projects. Small projects tend to be cosmetic in nature: fresh paint, new doors, garden windows, and ceiling fans. Large improvements involve adding or upgrading living space.

The desirability and popularity of your home improvement.
Today’s fad may be tomorrow’s standard. Backyard decks, for example, were difficult to find 30 years ago. Now decks are common. Decks may not have paid back very much in resale value decades ago, but as decks have become more desirable. The financial return of a deck on home resale value has increased.

Budget and quality are key to your return on investment.
The price of home improvements fluctuates depending on economic conditions and region. If remodeling costs are particularly high in your area (or home sale prices particularly low), you may not recoup as much on your investment as you would if costs were in sync with sales prices. When deciding on whether or not to do your home improvement project keep in mind that your budget is the key factor in your return. If you over-spend you can expect a smaller return. Conversely, if you use poor quality materials and cut too many corners to save on the project, or if the project isn’t done correctly or to code, any investment you made could be lost in repairs or replacement.


Bob Beisbier, owner of BK Home Inspection, is a Certified Master Home Inspector who has been providing professional and thorough home inspections in southeast Wisconsin for over 12 years. Bob is Infrared certified, DILHR Certified, and provides Home Energy Tune-ups, Environmental Data Reports, Pre-sale Home Inspections and Pre-offer Home Inspections.