PARAMOUNT MORTGAGE - LENDER'S BLOG

Home sellers are looking to squeeze every dollar of value out of their home when offering it for sale in today’s market.

Will sprucing up that home with a remodeling project ensure you’ll get your dollars back at resell time?

The latest facts in a recent study suggest you'll lose money.

Remodeling magazine's new 2010 Remodeling Cost vs. Value survey, undertaken in partnership with the National Association of Realtors (NAR), reveals that on average, “only 60% of remodeling costs in 2010 would be recouped by homeowners.”

The cost vs. value equation has been getting less attractive for years, but 2010 has seen a particularly drastic decline in the percentage of cost outlays recouped on sale.

Homeowners recouped on average 16% less value on remodeling projects than they had in 2009. It’s the steepest slide the survey has recorded in its nine-year history. This happened even as construction costs declined for the first time since 2004.

Undertaking a new mid-range bath remodel project returned nearly 100% of its approximate $15,000 cost back in 2003. Today, the same job costs more than $40,000 and only returns about half its cost.

In general, the more spent for a job, the lower the percentage of return. That's apparent in comparing kitchen remodels.

A mid-range kitchen remodel costs nearly $60,000 and returns just 70% of that expense at resale. A high-end renovation adds just 60% of its $113,000 cost.

Exterior improvements performed better than interior ones, owing to the necessity of maintaining a home's "curb appeal."

"In today's buyers market, given the large inventory, where people have so much selection, it's important to have the exterior catch the eye so they're willing to step inside," according to Lawrence Yun, chief economist for NAR.

Low cost exterior improvements do well. An exterior steel door replacement returned 102% of its $1,218 cost and new garage doors recouped 84% of theirs.

Have $10,000 to spend on a mid-range remodeling project and want the biggest bang for the buck? You’ll recoup at least 72.8% by adding an outside deck or remodeling your kitchen.

The lowest return of any job was for a midrange home office renovation. It will cost an average of $28,888, yet will only return $13,235 in value at just 45.8%.