Resale and Break-even Value of Your Renovations

It is the closing day on your home sale. Now it is time to break open a bottle of champagne and enjoy the fruits of your home selling labors. Have your home remodels helped you to make a profit or at least reach break-even status? Few homeowners are happy with losing money on the sale.

Before you pound that first nail or hang that first sheet of drywall, look ahead to how these projects correlate to your home's resale value. Certain modifications give better resale value than others. Even if you're simply looking for a break-even resale price, the thought process is still the same: Which home DIY renovations bring in more money than others? Data from the annual Remodeling Cost vs. Value Report point to trends that you should follow—or avoid—if you want to see a return on your home remodel investment.

Because a home remodel has a predicted high resale value doesn't mean that it will actually turn over a profit or break even at the time of the sale. Despite your best efforts, market forces often conspire against you, bringing your formerly high-value projects into the red. At the same time, it is best to start on a good foot. These projects tend to look the most attractive to buyers.

• Fiber-cement siding replacement
• Garage door replacement
• Mid-range kitchen remodel
• Manufactured veneer stone

The theme behind these high-value, high-return remodels: appearance. When you want to sell your house for the best possible price, you need to grab the attention of the potential buyer quickly.

Fiber-cement siding, garage doors, and manufactured veneer stone all qualify as important exterior elements that deserve special attention. A mid-range kitchen remodel, too, addresses the first room that many home buyers look at: the kitchen. If you can remodel these areas without spending too much money, you stand a good stand of making a profit or breaking even on the house sale.

Moderate value home remodels tend to retain their value or at least break even. Making a profit off of these mid-range home remodels may be tricky, but in some real estate markets, this may be possible.

• Vinyl siding replacement
• Vinyl window replacement
• Wood or composite deck
• Wood window replacement
• Entry door replacement
• Composite roof replacement
• Bathroom remodel
• Metal roof replacement

Most of these moderate value home remodels are solid and functional, but rarely are they eye-catching. Such mid-range home remodels take care of existing or upcoming problems such as roofing or siding leakage or energy loss due to outdated windows.

It is best to start these remodels far in advance of a home sale so that you can gain some benefits for yourself. Replacing poor windows for aesthetic purposes is fine soon before putting the house up on the market. But if you replace windows to save energy at that same time, you are only helping out the new homeowner. Window replacement takes years, if not decades, to recoup the cost of the windows through energy savings.

You should take on low-value home remodels because you want to do them, not because you expect to make a huge profit upon resale. In fact, your idea of a high-value remodel may be a remodel that the subsequent buyer is anxious to tear out.

• Kitchen remodel, mid-range
• Master suite addition
• Bath remodel, upscale
• Bathroom addition, midrange
• Major kitchen remodel, upscale
• Master suite addition

One of the controlling ideas behind low-value home remodels is they have a high cost-to-value ratio. A major, upscale kitchen remodel or a master suite addition are highly coveted by many home buyers. But whether these buyers lay out the money to purchase them is a different matter. Expensive home remodels must come with equally high prices spent by subsequent home buyers, if the current homeowner expects to break even.

Do not take on any of these low-value home remodels with the expectation that home buyers will line up at the door; in most cases, it just will not happen.