The Bottom Line on Fixing It Up

Home Renovations' Return on Investment Varies at Resale

If you're trying to sell your house, you're probably going to need to grab a paint brush -- or at least a phone to call a contractor. But as you fix up the place, keep a close eye on costs, as major remodeling projects rarely add to a seller's bottom line.

Even a minor, mid-range kitchen remodeling project in the Washington area would cost about $21,000, and a major "upscale" kitchen upgrade would cost $110,521, according to Remodeling magazine's 2007 Cost vs. Value report. That report seeks to estimate the costs of common remodeling projects, as well as how much of the investment will be recouped at resale.

"To sink those kinds of dollars into a property that you are planning on leaving is very risky," said John K. Wuestman, a broker and an owner of Re/Max Advantage Realty in Silver Spring. "Any thought of recapturing 100 percent of that isn't true," he said. "It's more like 70 to 75 percent."

Payoff for recent remodeling projects at resale varies depending on the project, Remodeling found. That mid-range kitchen upgrade, for instance, would add about $17,000 to the home's resale price, recouping about 82 percent of its cost. The upscale version would add about $85,000 to the bottom line, for a 77 percent payoff on investment.

Some projects had worse payoffs than kitchens, the Remodeling report found. Installing a backup generator, for example, cost an average of $12,874 but returned only 55 percent of that in value. Home-office remodeling also brought a poor return, costing an average of $26,679 and recapturing 56 percent of that in value.

That doesn't mean you should just throw up your hands and ask for less, though. "Anything that's broken or that you're thinking, 'We're just going to knock off the price,' fix it," Wuestman said.

Barbara Nowak, an agent in Long & Foster's Burke office, agreed, cautioning sellers against thinking they can avoid doing the work by instead offering credits toward repairs like carpet replacement. "You're better off doing it yourself."

Still, "people have to be very cautious," she said. In her experience, many of the projects with the biggest payoff were also the least expensive, she said.

The most important improvement, she said, is to "clean the house and clear the clutter."

After that, "paint's always a big thing," Nowak said. Sellers should also remove any dated wallpaper, as well as any flooring that is stained or worn. "If you have vinyl that's curling up," it needs to go, she said.

Consider replacing any dated light fixtures, Nowak said. "Those things will give you pretty good bang for the buck."

Overhauling a kitchen is costly and should be taken on with caution if you're on your way out, she said.