How to Calculate Home Renovation Returns
Renovating a home for resale is not usually cheap since the project involves various improvements, repairs and replacements. Besides, the projects also require upgrading some essential hardware and fixtures that can be a bit pricey than ordinary cosmetic remodels. Thus, it is important to understand the cost implications of different home renovation procedures to determine the remodels that can deliver better returns on investment during resale.
Guidelines for Estimating Home Renovation ROI
Homeowners should conduct proper research before remodeling their homes to understand the average costs of various renovations and their potential returns. The Hanley Wood and Remodeling magazine is one of the best resources to use in the research since it publishes comprehensive guidelines based on surveys with members of the National Association of Realtors.
The surveys take into account the expected resale value on specific home renovation projects, tallying and listing the results as national and regional averages. Nevertheless, the Annual Cost vs. Value Report is the most widely used guide for calculating the returns on home renovations. Garage door replacement and stone veneer installation are the most popular national home renovation projects, according to the above publication.
- Replacing a $3,470 garage door can generate about $3,411 in boosted resale value.
- Installing a $8,221 manufactured stone veneer can increase a home’s resale value by $7,986.
Homeowners should keenly look into the cost estimates for each project when studying Cost vs. Value report since not all remodels offer the same home resale value. For instance, building a backyard patio can recoup less than 50% of its cost.
Home remodeling and improvement costs usually vary significantly across regions and even cities. Thus, experts recommend consulting local real estate agents and remodelers for insights about the most prominent and valuable home renovations in your area. Nevertheless, the Cost vs. Value report is the most reliable and widely used resource for calculating the potential returns on home remodeling projects.