Wednesday, April 15, 2015

How Do You Define Value?

Will your remodeling project increase your home's value? On a day-to-day basis, this is, by far, the most persistent question we field at MKBD. We're happy to speak value--and we're happy to discuss precisely how a remodeling project can increase your home's value. Before we answer this question, however, we must talk about "value."

So how do you define value?

Most people who ask the value question are thinking, simply, of resale value. And often, this is the sort of value "experts" speak about when they attempt to answer this question.

We put "experts" in quotes here for a simple reason: many so-called experts answer this question incorrectly.

"Many projects do add value to your home, and improve your family’s quality of life," writes Heather Levin of Money Crashers. She continues: "Most people consider the kitchen to be the heart of the home, and because of this, updates in this room pay off. According to HGTV, you can expect to recoup 60%-120% of your investment."

This is not true. Not only does HGTV not say this; it is simply not true. The scourge of the Internet: randomly quoted numbers without any real source.

So do not believe anyone who tells you, straight-out, that a remodeling project will increase your home's value. If a prospective remodeling company tells you this, run for the hills.

Call MKBD, instead. We'll tell you the straight facts.

Do not let any remodeling professional sell you on bogus claims about value. Instead, define value for yourself. In this MKBD project, our clients intended to live in this house for years to come. Their project, then, was an investment in years of increased efficiency and happiness.

So here's the straight facts:

Many remodeling projects do not increase your home's resale value--at least not when compared to the expense of the project itself. At best, for most projects, you should plan to recoup a certain percentage of your initial expense. Here's what Investopedia has to say about resale value:

"The return on investment (ROI) of any given renovation project is a function of local market characteristics, the condition of the residential real estate market when the property is sold and the quality of the work performed. Historically and on average, certain projects, such as the addition of a wood deck, kitchen and bathroom upgrades and window replacement, have shown the greatest ROI...However, unless the remodeling project is designed to fix a structural issue or design flaw, it is unlikely that a homeowner will earn back more than the cost of construction."

If you want the lowdown on the actual ROI numbers, we suggest taking a look at the most recent "Cost vs. Value" report from Remodeling.

According to the nationally respected site, Remodeling, the most recent "Cost vs. Value" report for nationwide home improvements shows a 67.8% cost recoup for "major" kitchen remodeling projects, and an 79.3% cost recoup for "minor" kitchen remodeling projects. Those numbers are down from last year's report, which showed a 74.2% recoup for a major project and 82.7% recoup for a minor project.

At MKBD, we specialize in "major" kitchen remodeling projects. In this project, everything is brand new, from the cabinets to the powerful oven. With such an investment, the true value must exceed mere financial considerations.

So how do you define value? The answer to this question is unique to each homeowner. And this is why the answer is so crucial. By answering this question, you will set a template for a truly valuable project.

Our suggestion? Instead of focusing on re-value, look to the lifestyle benefits of your remodeling project. How would you like to change/improve your life?

For more, please read: "The Top Three Lifestyle Benefits of a Kitchen Remodeling Project."

Clean and cool: this two-tone Shaker-inspired kitchen is perfect for entertaining. A joyful dinner party is certainly a valuable benefit of remodeling.

Free In-Home Remodeling Estimate

If you have any questions about your next remodeling project, please feel free to call MKBD for an individualized consultation. Let's talk bathroom design and more! Call now! 215-355-4747. Better yet, check out our Free In-Home Remodeling Estimate on this very blog!

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