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Is it really worth investing $40k in a new kitchen? Will we get it back?

For years, we've heard about how upgrading a kitchen is so important and that it's a worthy investment. In this market, however, I wonder how much of a return we'd actually realize. We're replacing the floor, counters, appliances, and didn't know if it made sense to replace the cabinets, too. They're from 1996, but in 'like new' condition-maple, cathedral style. We've only had the home for a year, but it looks like we'll have to sell already due to my husband's job move.
If we invest $40k-$50k now, how much of a return on that will we see if we were to list the home today? We paid $425k. Can we turn around and sell it for $465k after having a brand new kitchen installed? Or, is that just not reality in this market? What's the average return on a kitchen remodel? 50%? 75%? 100%?
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April 03 - Danbury
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Answers (9)

An alternative option, to avoid tapping into your savings account, would be to take advantage of a home improvement loan which would cover all renovations you've mentioned. The appraisal would also indicate the value of the home as if the renovations were already completed so you'll have a very accurate idea of your homes market valuation. Additionally, the loan can be structured with no mortgage insurance and odds are, being that rates are still low, have a minimal impact on your monthly payment.

Whether or not this is the best option will come down to the numbers, but it's definitely a smart idea to at least weigh-out your options so you can best determine the most effective route to take. Please contact me at your earliest convenience, my contact information can be found within my profile.


Kind regards,

Paul F. Marzolla
Sr. Mortgage Consultant
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April 09
This is a hard question to answer. Our advice would be to consult with your Realtor to get their opinion. It very much depends on the overall market in your area, and how your house compares to others that may be for sale. A Realtor should be able to advise you on whether you should do nothing, make minor improvements, or go for a full upgrade. You may be better off putting a new Kitchen in your next house so you can enjoy it!
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April 04
The only way that a kitchen remodel can pay off 100% is if there was no functional kitchen beforehand (for example, a kitchen fire), or a brilliant architect solved a seemingly intractable problem and turned a cooking closet into something fabulous and perfectly proportioned for the house.

A well-maintained 15-year-old remodeled kitchen probably has 75% of the value of a brand new one . . . however, once you've remodeled the kitchen, then you have bathrooms to re-do, paint, trim, other decorations . . . giving a house a total facelift is an expensive proposition.

All the best,
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April 03
I am not understanding your motivation to spend 50K to "possibly" recoup 40K on resale on a house that you know had a fair market value of $425K a year ago.  Is your home in a neighborhood of higher valued houses and the older style kitchen is holding it back?  When you purchased your home, was it's dated kitchen something that enabled you to buy it at a lower price than average neighborhood value?

There is a fair amount of risk in investing in major improvements and renovations to a home simply for the purpose of selling, unless you are yourself a contractor or in the trades.  My best advice would be to seek the professional advice of a local real estate expert to find out what the fair market value of your home in the current market climate is and ask that local real estate expert to speak frankly with you about how the kitchen's current condition may effect its value or ability to compete with other properties. 

Consider this as well. The value of the kitchen upgrade may not be just how much of the investment you can recover on resale, but how quickly your house may sell or how much your new kitchen will put it ahead of competing properties.  With a job move imminent, everything you can do to insure that your home sells quickly and at its highest and best value so that you can move on to your next location, should be considered money in the bank.

Lastly, take some time to look through the 2014 Cost v. Value report for the New England Region below

 http://www.remodeling.hw.net/cost-vs-value/2014/new-england/
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April 03

You are probably more likely to see somewhere around a 60-75% return on that investment rather than 100%.

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April 03
I would recommend having the cabinets painted a fresh neutral color and update the hardware. This will give off a new feel without spending as much. Most buyers would like the option to choose their own back splash and certain specifics. So I normally advise sellers to hold off on making those specific design choices. Focus on decluttering, completing any minor repairs, and touching up paint where needed. Those things alone can make a big difference when selling.
Hope this helps and best of luck with your move!!
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April 03
Not long ago I blogged about just that topic. For more information on ROI (return on investment) see: [Content removed by Zillow Moderator. Please see our Good Neighbor Policy]
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April 03
Your kitchen remodeling contractor will promise you that doing the change will make you more that the cost.  I highly doubt that it will.  In fact, there's 2014 data for New England and specifically Hartford which shows a major Kitchen remodel might only return 50% of the cost.  My biggest question is what do you think the chances are that you'll pick EXACTLY what the new buyer might really want?  Here's a link to that report:  

My advice would be to make sure any maintenance is complete on the home.  Stage it properly by decluttering and making sure your listing agent dose a comprehensive job listing your home with maximum amount of great photos, making documents (deed restrictions, disclosures, list of special features, etc.) readily available in the MLS system to Buyer's agents, and do your best to accommodate short notice showings.

Best of luck in your home sale and move.

Greg Hanner, REALTOR, Broker, e-PRO
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April 03
Profile picture for wetdawgs
A kitchen remodel is one of the most likely to give close to 100% return, but you'd probably be safer calculating 50 to 75% return.   Your current kitchen was okay when you bought a year ago, what's happened since?

Good luck with your move.  What a pain to have to relocate so quickly.  
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April 03
 
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