Getting Real About Renos: Will Kitchen Upgrades Really Add Value to My Home?

kitchen upgrades

This is the fourth installment of an occasional column called Getting Real About Renovations. We’re looking at renovation realities for all sorts of projects, from hardwood floors and open floorplans, to master suite additions and kitchen upgrades. We’ll give you the unadulterated truth about options, costs, effort, Realtor opinion, and estimated ROI for these projects. You can read the last one about adding new insulation here.  

Kitchen renovations are a big deal on popular media—there’s hardly a home improvement show that doesn’t glorify the tearing apart and putting back together of a kitchen.

This is probably for good reason. The kitchen is the heart of the home and updating it can make a huge difference in the look and feel of a house.

But is it worth it? The headache and expense? Fully 35 percent of U.S. homeowners would rather move to another home than remodel their current home, according to the 2015 Remodeling Impact Report from the National Association of Realtors and the National Association of the Remodeling Industry.

It depends on the reason for renovating, says Harrison Polsky, a Realtor with Briggs Freeman Sotheby’s International Realty.

“Doing renovations can either do nothing for the seller, benefit the seller, or even hurt the seller—there honestly isn’t a right or wrong answer—think about how many spec homes are still on the market,” Polsky said. “When you start to speculate what buyers want, your risk increases. However, some buyers can’t see past an outdated kitchen and can’t get a construction loan to do the work.”

No matter the reason, though, the return on investment (ROI) for kitchen renovations is more than two-thirds the investment. Jump to learn more!

kitchen upgrades

Source: 2015 Remodeling Impact Report from the National Assoc. of Realtors and the National Assoc. of the Remodeling Industry

“I definitely think your largest return on investment are in your kitchen and master bathroom,” said Joe Newton, a Realtor with Ceda Realty. “In this market, it appears remodeling is key because the market is hot and people will pay for those upgrades. If the market was a little softer, you may think twice about doing a lot of renovations…if the kitchen is a dated and the clients have the time/money to spend before putting the home on the market, then I would recommend some renovations.”

Kitchen renovations can be divided into two categories: simple upgrades and a complete overhaul. Upgrades, the less expensive of the two options, averaged between $20,000 and $30,000, and saw a ROI of 67 percent, according to the 2015 Remodeling Impact Report.

Even modest upgrades made a big difference in the livability of the home: 82 percent said they have a greater desire to be home since completing the project, 75 percent have an increased sense of enjoyment when they are at home, and 79 percent feel a major sense of accomplishment when they think of the project. This gave the project a 9.4 “joy score” (out of 10).

According to the study, 57 percent of Realtors have suggested a smaller kitchen upgrade before attempting to sell, and 25 percent said the project most recently helped cinch a deal for them, resulting in a closed sale.

“I do not typically recommend a total kitchen renovation when a client sells but sometimes a little upgrading helps,” said Kevin Caskey, an agent with Dallas City Center Realtors. “Buyers seem to prefer a bright, open kitchen, so opening walls, white cabinetry, nicer appliances seem to be selling homes.”

A complete kitchen overhaul had a heftier price tag, ringing it between $40,000 and $60,000. The project saw a 67 percent ROI, the same as minor renovations, interestingly.

With a complete overhaul, 90 percent of people said they have a greater desire to be home since completing the project, 86 percent have an increased sense of enjoyment when they are at home, and 93 percent feel a major sense of accomplishment when they think of the project. This gives the complete kitchen overhaul a “joy score” of 9.8 out of 10.

The study says only 17 percent of Realtors have suggested sellers complete a complete kitchen remodel before attempting to sell, and 12 percent said the project most recently helped cinch a deal for them, resulting in a closed sale.

“You have to be careful with something like changing the kitchen layout or a full gut job,” said Newton. “This can easily become a money pit, that you don’t end up having any real return on investment. You want to do renovations depending on the neighborhood your home is in. If yours is the only home with a wine cellar, marble counters, and travertine floors, then you might not get that money back. If most of the homes have granite countertops, stainless steel appliances, and nice backsplashes, then you can be pretty confident that will be money that has a return.”

What sells in a kitchen reno? Agent Pam Smith with Ebby Halliday Realtors says granite is still a great upgrade, along with some other popular choices.

“Subway tiles and glass tiles are very popular now for the backsplash,” Smith said. “In older homes where the kitchen is separate from the living area, opening up the space to create an open floorplan it is a great selling point. Depending on the size and price point of the house other great additions are a wine fridge, farm sink, pot filler, under-cabinet lighting, custom cabinetry with pull-outs, built-in spice racks, etc., and of course, great appliances.”

She said a smaller reno is the way to go before a sale.

“In my opinion, if a homeowner is looking to do the minimum they can do to prepare the house for sale, the kitchen facelift is the way to go,” she said. “By increasing the appeal of the kitchen, they will make it more attractive to buyers, and give seller an advantage over their competition. Larger kitchen renovations should be undertaken only if the homeowner is going to have the benefit of enjoying the finished project for a while before selling.”

 

3 Comment

  • As a survivor of a full gut kitchen remodel taken down to the building studs, don’t do this unless you intend to be there for the foreseeable future.

    Be ready to exist on meals out and a microwave oven for weeks, but it is worth it if you choose your remodeler very, very, very carefully. There is absolutely no barrier to entry for one to go into the kitchen remodeling business, so the field is overridden with clowns that could not manage a lemonaid stand.

    It is vital to purchase a full membership to Angie’s List if you are going to do a kitchen remodel. Deal only with those remodelers who have an A or B rating from at least ten customers.

    After you have your short list of contenders, run additional checks with BBB and YELP.

    if you get a Boche dishwasher for the uber low decibels, be prepared to wash dishes by hand for a couple of weeks periodically while parts are in route from Germany.

    It will take forever to find a granite slab that will color coordinate with your cabinets, your flooring, your walls and your appliances. It took my wife a full 150 hours of dragging her swatches around to many granite shops to find the one ideal and absolutely perfect slab that everyone raves about. Thus, most granite surfaces do not match other kitchen components.

    It may save you some grief to know that PIRCH differentiates themselves by locating those few installers who qualify as CRAFTSMEN to do their installs.

    I suggest that you consider who can provide service on your appliances before making your choice. Sears may not be in business much longer, but they do offer a maintenance program in which their techs come out and do preventive maintenance once annually. if you do not utilize Consumer Reports to avoid those appliances that
    are high maintenance nightmares, then you deserve each of those gray hairs that you will get later.

    Select your knobs and pulls early in the process. It takes quite a bit of searching to find the ones that are a superb fit to your decor, and they probably will not have in stock the quantity you require for your kitchen.

    Our remodeler spent two weeks twiddling his thumbs waiting for those very special pulls to arrive as he failed to give us a heads-up that pulls should be selected and ordered early.

    If you are serious about cooking, observe that triangle rule; it is there for a reason.

    You might want to consider undercounter lighting as well as solartubes if you lack a large window to the outdoors.

    • mm

      Bravo on that triangle rule. But Dormand, I had TWO Bosch dishwashers and they lasted 16 years with ZERO repairs. Then one broke a few weeks ago so I replaced both to get another 16 years. BTW 8 to 10 years is the average life span of a dishwasher but since I had two (which I highly recommend, party clean up is a breeze) they each got about 8 busy years. Don’t forget to use FRESH. Also how is the water in Seattle? Dallas water (the techs tell me) is very tough on appliances.

  • I suspect there is another metric on ROI for kitchen remodel. Factor in the age of the kitchen. 1960? You’ve got pretty much nothing to lose. 2010? You’ve got nothing to gain.

    Dormand: Always pick stone first, it has the least options. There’s a lot more variety in cabinet stain/paint and tile colors.