When reading the Cost vs. Value Report in the magazine, most people skip over the fine print and go right to the data, leading to questions and misunderstandings that I thought it would be helpful to address here.
The costs are too high (or too low). We still get this a lot, even after we introduced midrange and upscale versions of many projects. Even then, our costs are averages, so they are not a literal estimate of any actual project, and they don’t take into account any extraordinary conditions, such as difficult site access or owner labor.
Where costs seem too high, remember that they include a healthy gross profit margin; lowballers will always be able to undercut the prices we list.
In some markets, our prices may appear low. This is usually because what actually goes into the project differs from our project descriptions, which don’t specify brands or models.
If either of these objections arise, use the Report to calibrate your own pricing, then look for the ways in which the project you are discussing differs from our generic description.
My project doesn’t fit the description. No two projects are exactly alike. And even if the existing homes are the same, the homeowners are different. The Cost vs. Value Report is not a universal template and should not be applied literally to any specific project. The Report is most useful when it serves as a backdrop against which decisions surrounding a potential remodeling project can be weighed.
I’ll never get my money back. That depends. Although national averages haven’t topped 100% for any project since the peak of the recent remodeling boom in 2005, almost every year a few cities show a cost recouped of more than 100% for some projects. This typically occurs in strong real estate markets, but buyer expectations can also play a role. Homeowners who add a second bath to a home that doesn’t have one, for example, will probably get their money back if it brings their house up to the standard of the neighborhood.
I won’t get enough money back. The dollar amount commanded at resale isn’t the only kind of value a remodeling project provides. Some improvements, such as siding and roofing, help preserve the overall investment, while other projects create space that is enjoyed for years before the house is sold. This kind of subjective “utility value” is hard to measure but quite real.
In the end, resale value is just one factor of many that influence a homeowner to undertake a remodeling project. The Cost vs. Value Report will support and reinforce the benefits of remodeling, but it won’t sell the project. You still have to do that.