Some renovations add more value than others, so think before you update
By Chris Reidy, Globe Staff | January 30, 2005
David Hallal's job in the pharmaceutical industry has taken his family to California, Kansas, and Georgia. And all that moving has given his wife, Terrie, insights into home remodeling. Before selling their Atlanta-area home in 2003, they had the basement finished.
"That didn't add a lot of value," said Hallal, 36.
Now in Sudbury, and hoping to stay put, the Hallals are at the start of a $200,000 renovation that could add a lot of value to their home when it's eventually sold, REALTORS® said. Plans call for overhauling the family room, putting a skylight in the kitchen, installing new kitchen cabinets, and replacing old countertops with granite.
"Imagine. A million-dollar home with Formica counters," Hallal said.
If a recent report by Harvard University's Joint Center for Housing Studies is any guide, remodeling has become a national pastime. While most remodeling increases people's enjoyment of their homes, some renovations add more value than others -- something homeowners should keep in mind as the spring home-selling season approaches.
When it comes to getting a good return on remodeling dollars, it's hard to go wrong updating kitchens, upgrading bathrooms, and adding a family room, local REALTORS® said; those kinds of renovations make homes more desirable and help them sell faster and for more money when they eventually go on the market. Conversely, homeowners should think twice before installing a swimming pool, putting a bedroom in an attic, or finishing a basement. Attics and basements are rarely high on house hunters' wish lists.
"People don't say to a REALTOR®, 'Show me a house with a great basement,' " said Peter Feinmann, president of Feinmann Remodeling in Arlington.
Ditto for attics. And pools leave many cold. In Greater Boston, they can generally be used only a few months a year. So, as an investment, they don't deliver much bang for the buck.
"Some buyers are alienated by pools," said Judy Moore, a REALTOR® with RE/MAX Premier Properties in Lexington. "They think, 'Why pay for something we won't use?' "
Strictly from an investment standpoint, adding a deck may be a bad idea for the same reason; it can't be used year-round.
"Decks take a beating in New England," Feinmann said. "Build a deck today and five years later, it looks like crap."
If a homeowner does only one renovation, kitchens may be the way to go.
"Buyers typically make up their mind about a house within a minute or two of walking inside," said Rich Goulet, president of the Appraisers Group in Watertown, which values homes for mortgage lenders. "One of the first things they see is a kitchen. It's a big selling point."
Bathrooms are another big selling point. But forget whirlpool tubs. Few folks today have time to soak in suds.
"What people like today," Feinmann said, "are big showers, ones with multiple showerheads, pretty tiles, built-in niches for shampoos and conditioners, and built-in steps that make it easier for women to shave their legs. People would rather luxuriate in a big shower than sit in a tub."
Many contractors recommend against undertaking massive projects if owners plan to sell within two years -- there isn't enough time to recoup costs. But even if homeowners have no immediate plans to sell, it's wise to renovate with selling in mind, because in today's mobile society a job transfer or a job opportunity requiring a move can come any time.
"People are always looking for the balance between their personal tastes and what will add value to a resale," said Chad Smith, a designer with the Corner Cabinet in Framingham. "Everybody thinks about reselling."
If a house is not up-to-date, a remodeling project that brings it in line with neighboring houses can be a good idea. Many homes in Lexington, where Goulet lives, have four bedrooms and a family room. Two years ago, Goulet spent about $100,000 on renovations that included adding a fourth bedroom and a family room to his Colonial.
"My guess is I'd get 80 to 90 percent of that back if I sold the house," Goulet said.
Remodeling magazine and the National Association of REALTORS® conducted a survey that estimated how much remodeling projects increase a home's value. Nationwide, the 2004 average cost of a modest kitchen renovation was $15,273. If a home were sold soon afterward, the owner would get an average 93 percent return on investment, in the form of a higher selling price.
By contrast, the addition of a sunroom, with a national average cost of $31,063, brings only a 71 percent return, the survey found.
In Greater Boston, renovating a kitchen can generate a bigger return than the survey's national average, said Laurie Cadigan, a REALTOR® with Barrett and Co. in Concord.
"If you have two identical houses side by side, and one puts in a $20,000 kitchen, it's going to sell for $30,000 more than the other," she said.
In estimating how much value renovations add, national surveys take too broad a view, said Raymond J. Wiese, founder of the Wiese Co., a remodeling firm in Natick. Many local variables, such as the availability of buildable land and a home's age, come into play.
In suburbs such as Newton and Wellesley, where many homes are old and small, remodeling that increases living space -- like adding a family room -- can yield high returns, as can renovations that adapt an outdated floor plan to today's lifestyles, he said.
Before they married, Wiese's wife bought a Wellesley home in the late 1990s for $420,000. A $20,000 project added an eating area to the kitchen, and the house sold a year later for $500,000, Wiese said. Not all of the added value came from remodeling. During that time, homes in well-heeled Wellesley, with its high-performing school system, were appreciating annually by double digits.
Wiese suggests bundling projects together so homeowners can realize economies of scale. One package he offers in Wellesley for about $400,000 renovates the kitchen and adds a family room and a master bedroom suite. If the house was worth $1 million before remodeling, it can be worth $1.6 million afterward, Wiese said.
Noel and David Cappillo, who purchased a nearly 90-year-old Colonial in Wellesley for about $640,000 three years ago, needed more room as their family grew. When they went house hunting, larger homes that fit their needs were priced between $1 million and $1.3 million. They concluded it made more sense to hire Wiese to give their current home a roughly $300,000 makeover that includes a kitchen renovation and additions of a family room, a fourth bedroom, and a garage.
"We've been living out of the dining room with a refrigerator and a toaster oven for the last 3Â1⁄2 months," said Noel Cappillo, 31, a chiropractor.
But their ordeal has a payoff. If they had to sell now, Cappillo thinks their remodeled house could be worth $1.1 million.
And she said: "The price can only go up."
Chris Reidy can be reached at
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