Understanding Home Remodeling Cost vs. Value for the Investment

This is the third and final post in a series of blog articles focused on home remodeling costs. In the first and second articles, we shared how to prioritize your renovation wish-list to stay on budget and strategies that would enable you to save money while still ensuring a high-quality renovation. Here we discuss the value of your home remodel and what the cost means.

Budget is one of the top concerns when planning home renovations, and for some, how that budget relates to home value is very important. The relationship between the value and the remodeling cost is more complex than people think. When you remodel your home, you’re adding value to the home asset, but you’re also investing in you and your family to alleviate some pain or challenge that you’re experiencing.

The Annual Cost vs. Value Report

A useful tool for figuring out the possible value a project can add to your home is the annual Cost vs. Value report. It is a yearly set of remodeling estimates that have been released every December since 2002. Remodeling Magazine compiles the information they collect from realtors and a publisher of remodeling cost estimation tools. Then they determine the values of renovation projects for the preceding year.

Cost vs Value

The report is available online, and it’s easy to use. The archive goes back more than two decades, so if you are interested in previous year’s reports, you can find them easily. Remodeling Magazine also takes into account subjective factors like trends to gauge how the popularity of a project can affect its value.

However, there are a few things to keep in mind when using the report. Remember that it is designed as a tool to get an estimation of regional averages for project costs. No two remodels are identical. While the report is helpful, it should never be taken as an exact assessment.

Conclusion

Renovating your home is exciting, but be aware that the relationship between cost and value is not an equal one. If you are concerned about receiving a return on your investment, that relationship is something to consider before starting your project. A renovation project for your “forever home” will likely look a great deal different than renovations intended to prepare a home for market. Whether you are updating to move or settling in for the long haul, it’s hard to put a value on loving where you live.

We hope you found this series on home remodeling costs to be helpful! If you have any questions or would like to speak with us about your next home remodel, please contact us.

To Move or Improve Part 2: Using Design to Help Answer the Question

To Move or Improve Part 2: Using Design to Help Answer the Question

In an earlier post, we weighed the relative merits of investing in a renovation versus relocating to start anew in a custom or resale home. While many homeowners may desire to stay, over time changing household needs force this decision-making. This can be particularly true among empty nesters. According to AARP, 80+% of 50 year old plus households want to stay in their current home during retirement, but only a small percentage have done the work to prepare those homes.

Challenges to Starting Home Renovations

The biggest challenge to starting a home renovation tends to be procrastination. Not only is remodeling an expensive undertaking, it is also disruptive to family life. As a result, many people avoid renovating for as long as possible, even when finances aren’t a barrier. It can also be difficult for the average person to envision their home configured differently leaving them skeptical as to the potential for their current space to meet their needs. This is what leads most to contemplate relocating over renovating. In this article, we explore how homeowners can utilize design services to better visualize how the space in their current home can be reconfigured to meet their needs.

A Picture Speaks a Thousand Words

As gifted as we may be at describing with words how we can alter a room, the best way to communicate what can be accomplished is to illustrate the various options with drawings. This is known as the “Design” portion of the Design-Build process. At Custom Craft, we also refer to this as the “Create” stage. When clients enter into a design contract with Custom Craft, they can expect to invest approximately 3-7% of the total value of the project on their design. Upon completion of this phase, homeowners not only have a valuable visualization tool, they have a construction budget, as well as all of the relevant construction documents including the floorplan, finishes, fixtures and other specifications for their project. At this point they can make a “go/no-go” decision on whether to proceed to the construction phase, or consider alternatives like relocation.

How Designs are Created

After asking a lot of questions, and listening carefully to our clients to learn how they want to use the space, as well as taking numerous measurements, we produce multiple schematic drawings of a revised floorplan for our clients to consider. Once we have arrived at a viable option that meets their needs, and worked with a client on material selections, we will produce a 3D rendering of the space.

Renovation Design Example

The homeowners for this project wanted to explore how they could make better use of the space available in their kitchen and family rooms. As you can see from the before image of their floorplan below, their kitchen was small, lacked counter space for preparing meals, and was generally dysfunctional for entertaining family and friends. By engaging Custom Craft for our design services, we were able to illustrate for them how their kitchen and family rooms could be reconfigured to provide the features and functionality they desired. Scroll down to see how we designed a floorplan schematic and then created 3D renderings of the kitchen and family rooms to bring the re-imagined space to life.

                                       

 

 

 

Need Help Visualizing Your Home?

If you need assistance visualizing how your home could be transformed to better suit your lifestyle, contact Custom Craft. Our talented team of designers and craftsmen will work with you to explore all of your renovation options.

Should You Move or Improve Your Home?

Move vs Improve

If you are frustrated with the current state of your home, then you are likely thinking about making a change. To move or improve, that is the question–and the decision it presents is difficult. After all, renovations are a significant investment. Starting fresh elsewhere may seem like an appealing and economical alternative. But before you start looking at putting your home on the market, take some time to educate yourself about the tangible and intangible costs of relocation.

Calculating the Costs of Selling Your Home

Curb Appeal Improvements

Even in a seller’s market, buyers can still be picky. To sell your home quickly, and at your asking price, your home needs to photograph and show well. Ask any Realtor, and they will advise you that there are basic improvements to the interior and exterior which will need to be completed prior to placing your home on the market. These improvements are likely to include new interior paint, flooring, appliances, as well as curb appeal improvements to your exterior including mulch, landscaping, new shutters and more.

Cost? Budget $15,000 to $20,000 on these basic renovations.

Closing Costs

When you are the seller, you pay the Realtor’s commission out of the sale price of your home. The cost of this commission is typically 6%, however there is a 1% transfer tax that also has to be paid, as well as an assortment of other fees, plus the additional funds that need to be put in escrow for taxes on your new home.

Cost? The estimated closing costs for a $400,000 home are around $30,000.

Moving Costs

To pack and move your home will be time consuming, and involve a great deal of heavy lifting. You can save time (and your back) by hiring someone to handle the packing and moving for you, but that will add to your out of pocket expense.

Cost? Budget $6,000 to $7,000 to hire a company to pack and move your belongings.

Purchase Price of New Home

The biggest expense associated with moving will obviously be the purchase price of your new home. If you are buying in a seller’s market, it generally means you are unlikely to get a bargain on the price—especially for a home that has been renovated to include the amenities you felt were lacking in your current home. Unless, of course, you are purchasing a ‘fixer upper’. And if that is the case, might we suggest that you focus on fixing-up the home you’re currently living in and save a few dollars?

On the other hand, purchasing a home that has already been renovated means you will typically pay less for the renovation services than the original homeowner did and you will be able to finance those costs over the life of the mortgage. That said, there are likely to be things you will want to change and you will need to budget the funds for those upgrades, as well.

Cost? Variable.

Location, Location, Location

When determining whether or not to relocate, homeowners should evaluate their current neighborhood for its relative strengths and weaknesses. Start by asking yourself these questions:

  1. Do you like your neighbors?
  2. Do you like your proximity to amenities such as grocery stores, retail, banking, restaurants, schools, houses of worship, parks, and other sources of entertainment?
  3. Do you have access to conveniences like public sewer?
  4. Does your municipality offer public safety services like police, fire, and emergency medical?

Realtors often emphasize location as a major benefit of a particular property. If you answered “yes” to more than one of the questions above, then your current residence offers many benefits which may be difficult to replicate—and very costly to change again once you have moved.

Cost? Intangible.

Will You Move or Improve?

Ah, decisions, decisions. Yet only you can determine whether it would be more advantageous to stay and improve your home, or if relocating to start fresh elsewhere is the better option. Hopefully this article provided the insight to help you make an educated decision. Whether you decide to move or improve, the team at Custom Craft would be delighted to help you make either home a better, more satisfying place to live.

Looking to improve your home? Contact Custom Craft at 610-584-0665.

Read the 2013 Remodeling Cost vs. Value Report

Remodeling Magazine released the 26th annual Remodeling Cost vs. Value Report to the public this past January.  It contains localized data from the Philadelphia region and compares construction costs of 35 popular remodeling projects against the resale value that these projects could add to your home. The results of this report present the homeowner with an estimate of how much of their cost is recouped at resale.

Read the report by clicking on the image to the right:

In 2013, the top three remodeling projects with the highest return rate are projected to be 1) Entry Door Replacement (steel); 2) Garage Door Replacement; and 3) Deck Addition (wood).  As the cost of living continues to improve, the demand for housing will grow. The Remodeling Cost vs. Value report is a beneficial tool that can be utilized in your home-improvement decision-making to help you to determine the next best project for you and your home.

A Remodeling Cost vs. Value iPhone app is available for free download at the AppStore and has been updated with new data.  See what your home-improvement project could be worth!