Is your kitchen straight out of the 80s? You know the style: closed off from the rest of the house, plain oak cabinets, a clunky island, ugly taupe countertops, peel-and-stick tile flooring. If so, maybe it’s time for a remodel so down the road, you can sell your house for more. But let’s be honest. How much does a kitchen remodel increase home value?
Ultimately, you’re not likely to get back everything you paid for your kitchen remodel when you sell your home. It’s a popular but low return project. Do your research here before starting demolition—you’ll learn about the cost, what you gain, and what you can do to decrease expenses. Check out our range of kitchen renovation at Hitch Property Constructions.
Types of kitchen remodels
Remodelling magazine, an industry leader in tracking remodelling cost data, splits kitchen remodels into two categories: minor and major, with major remodels broken down into mid-range and upscale, based on the extent of the project, the quality of the finishes, and the time and money invested. We’ll dive into that data a bit more later.
There are three factors that can help you determine which scale of remodel is best for your home and your situation:
- Home value: Your remodel should reflect the price point of your home. Does it make sense to install professional-grade appliances in a $200,000 home?
- Local market: Are buyers in your area looking for brand-new kitchens, or would your home be the only one?
- Budget: How much do you have to invest in your kitchen remodel without dipping too much into your home equity?
Minor kitchen remodel
In a minor kitchen remodel, you work with much of the existing kitchen, so you’re not gutting it, changing the layout or moving walls. Instead, you might replace cabinet fronts (but keep cabinet boxes) and add new hardware, upgrade to granite or quartz countertops, get a new set of matching appliances, repaint, or put in new flooring.
Remodelling magazine puts minor kitchen remodels under the cost category of “midrange,” due to the limited scope of work.
Major kitchen remodel
In a midrange major kitchen remodel, you’re likely overhauling the whole kitchen. You could be moving walls and rearranging the layout to improve functionality. You might add an island, semi-custom wood cabinets, energy-efficient appliances, a standard stainless steel sink and new flooring. The final touches might include freshly painted walls, trim and ceiling.
In a major upscale kitchen remodel, you may take many of the same actions. Still, the finishes will be higher quality — think top-of-the-line custom cabinetry, stone countertops, high-end appliances, and imported ceramic or glass tile backsplash, an under-mount sink, a faucet with water filtration, and upgraded lighting, which could include general and task lighting, as well as under-cabinet, LED lighting. The flooring material will be tile, wood-look tile or wood.
What is my kitchen remodel ROI?
From a financial standpoint, the best (and smartest) kind of kitchen remodel is one that you can enjoy yourself for a few years before selling since you’re unlikely to recoup 100 per cent of the money you spend on the renovation.
In fact, many people decide to remodel instead of selling, because of the low housing inventory over the last few years.
But if you’re planning on selling, listing your home with a brand-new (or almost brand-new) kitchen is a good way to attract a wide pool of buyers — and potentially a higher sale price.
The average return on a kitchen remodel varies greatly by region, the local market and the level of renovation you do. Remodelling magazine’s Cost vs. Value Report 2018 breaks down the average home sale return by region and scope of the project.
National minor kitchen remodel ROI
- ROI: 81.1 per cent
- Average cost: $21,198
- Return: $17,193
National midrange major kitchen remodel ROI
- ROI: 59 percent
- Average cost: $63,829
- Return: $37,637
National upscale major kitchen remodel ROI
- ROI: 53.5 percent
- Average cost: $125,721
- Return: $67,212
Minor kitchen remodel ROI by region
The general rule is that the less money spent upgrading the kitchen before resale, the better. Your goal is to achieve a new look without overspending or upgrading too much. Across every region in the report, a minor kitchen remodel offers the best return on investment of any kitchen remodel type. Looking for kitchen renovation Melbourne? Look no further? Hitch Property Constructions has you covered.
- Homeowners in the Pacific region (California, Hawaii, Washington, Oregon and Alaska) see the highest minor kitchen remodel ROI at 92.9 per cent, based on an average kitchen remodel cost of $23,587 and an average recouped the cost of $22,181.
- The worst ROI is only 67.6 per cent. That’s with an average kitchen remodel cost of $21,455, and an average recouped the cost of $14,532.
- The average ROI for a minor kitchen remodel is between 73.4 and 83.8 per cent.
Should I remodel my kitchen before selling?
In short, yes. But that’s if you’re doing a kitchen remodel that’s in line with what other homeowners in your area are doing and what buyers are looking for. While you probably won’t see a 100 per cent return on money spent, you might shorten the length of time it takes to sell.
Ask yourself these questions before you hire a contractor and demolish your kitchen.
Do nearby homes show a return on a kitchen renovation?
Talk to your real estate agent to determine if the recent comps in your area support a remodelled kitchen. If you’re selling on your own, check the comps yourself. Running these numbers can help you figure out your budget and identify how much you realistically should be spending on the remodel.
Here’s an example: If homes very similar to yours with similar kitchens are selling for $200,000, and homes with remodelled kitchens are selling for $215,000, you won’t want to spend more than $15,000 on your renovation.
If you’re in a hot real estate market with many new construction homes, a bigger renovation might be worth it, since you’re competing with brand-new kitchens. And if you leave your very dated kitchen as-is, you might attract lower offers.
Can I afford to remodel my kitchen?
One of the first questions you may ask yourself is how you’re going to pay for it! After all, if you’re hoping to sell your home for more money based on the upgraded kitchen, you won’t recoup that money until after the sale.
Unless you have the cash available to fund the renovation, you’ll have to refinance or take out a home equity line of credit (HELOC) to pay for the renovations, which will cut into the profit your pocket at closing. So, make sure the project still makes financial sense when you factor in your payment method.
Does my home need other repairs?
Yes, a brand-new kitchen will likely attract new buyers, but quartz countertops and a Viking range aren’t going to save the deal if the home inspection reveals serious problems elsewhere in the home. If you’re contemplating spending thousands of dollars on getting your home ready to sell, first take care of serious red flags like structural issues, a leaky roof, a failing HVAC system or electrical problems.
Does my kitchen really need remodelling?
With thousands of online home listings at your fingertips, it’s easy to compare your home to the latest and greatest in kitchen trends. But that doesn’t mean that every buyer is expecting a brand-new kitchen. If you don’t want to go through the headache, time and expense of a minor or major kitchen remodel, and there’s nothing functionally wrong with your kitchen, selling without remodelling first might be your best bet. Hitch Property Constructions has an extensive range of kitchen renovation Melbourne to take the hassle out of deciding the right furniture that matches.
How to boost your kitchen remodel ROI
Use the following tips to save money and attract home buyers with a fresh, updated look in the kitchen.
Match your appliances
You’re better off matching your appliances (so they’re all black or all white) than spending all your money on one fancy stainless steel appliance that will stick out and make your kitchen look partially upgraded.
Refinish or paint your cabinets
Far less expensive than replacing cabinets completely or even replacing the door fronts, refinishing or painting your cabinets can go a long way toward giving your kitchen a fresh, new look. This can definitely be a DIY project, but it’s time-consuming. Be prepared for a lot of prep work, like cleaning and sanding, to ensure a professional-looking finish.
Refresh your sink grout
Without even changing out the faucet or the sink itself, removing and replacing mouldy or peeling grout can make your sink area look clean and well-maintained. This can be done even if you aren’t planning on replacing the countertops.
Replace the kitchen faucet
Swapping out an old kitchen faucet for something new and updated is an easy and cost-effective fix. Depending on your skill level, it may require a plumber.
Invest in new counters if needed
Damaged countertops should be replaced, as they can make the whole kitchen look outdated. The most cost-effective materials are laminate, butcher block or stainless steel (a look that only works on modern kitchens).
Install a backsplash
If your kitchen doesn’t have a backsplash, adding one can be a big upgrade, and it should cost only a few hundred dollars. It’s a DIY project many homeowners can handle. As far as choosing materials, subway tile is not only popular but also very affordable.
Swap your lights
Dated pendant lights or a discoloured overhead light can easily be switched out for something more modern. Many buyers prefer recessed lighting, but that requires a larger investment. If you really want to make an impact, consider installing under-cabinet LED strip lighting.
Change knobs and drawer pulls
Perhaps the easiest upgrade of all, swapping out old cabinet hardware (or adding it for the first time) is an affordable project that can be completed in an afternoon. Even better, you can add soft-close cabinet hinges, which are popular with buyers.
A Minor Kitchen Remodel Can Yield Major Return on Investment
A small kitchen remodels project can be a great investment for your home. Resurfacing kitchen cabinets, changing their hardware and making other minor improvements can boost your home’s value enough that they come close to paying for themselves.
Small kitchen projects earn a return on investment of more than 83%, according to the latest Cost vs. Value report from remodelling magazine. That means for every $100 spent on the upgrade, a home’s value increases by $83, on average. That’s a much better return than many owners get from other home projects, including basement additions, bathroom upgrades and even replacing the roof.
You could also consider replacing one or two appliances with new ones that have high energy-efficiency ratings, updating your floor or countertops and applying a fresh coat of paint.
Such upgrades have many benefits. You’ll enjoy your kitchen more, bump up your home’s value and maybe even command a higher price when you’re ready to sell your home. Overall, there’s a good chance that updating a kitchen will make you a happier homeowner.
Major vs. minor
Minor updates shouldn’t be confused with major kitchen upgrades, which can involve replacing all appliances, the sink, the countertops, the flooring and vents and adding an island. Such major overhauls can cost up to six figures for some upscale kitchens, says Peter Grabel, managing director of Luxury Mortgage Corp. in Stamford, Conn.
A major upgrade would increase the value of your home, too, but that increase may not come close to the amount of money put into the renovation. This is especially true if other homes on your street don’t have updated kitchens. You’d want to do a major remodel more for personal reasons than financial ones.
By contrast, the average cost of a minor kitchen remodel is about $20,000, according to the Cost vs. Value report.
Know your neighbourhood
If you’re planning to update your kitchen design, it’s a good idea first to contact a few real estate experts in your community to see how much your home value might increase after a kitchen renovation. Talking to local real estate agents can help you know how much of your cost you can expect to recoup if you make specific changes to your kitchen. You want to bring your kitchen up to the standards in the community, but you don’t want to price it out of range.
You’ll also want to have a good idea of what other homes are selling for in your neighbourhood.
That way, you’ll know the potential limits to how much buyers would be willing to pay for your home, regardless of the kitchen upgrades. It’s OK to spend money to upgrade your kitchen, as long as what you’re doing is consistent with the rest of the house and the houses on your street.
Other minor home improvement projects with major ROI
A minor kitchen remodel isn’t the only home renovation project that can give you a good return on your money. Here are some other small projects that offer a big payback:
- Adding attic insulation. Improving your home’s insulation can pay for itself and then some, letting homeowners recoup an average of 116.9%.
- Replacing the front door. Homeowners can expect to earn an ROI of up to 91.1% of the cost to replace a standard entry door with a 20-gauge steel unit.
- Replacing the garage door. Replace a 16-by-7-foot garage door with a new four-section door on galvanized steel tracks (but keep the existing motorized opener), and you could recoup 91.5% of the cost, on average.
Generally, kitchen makeovers offer a good return on your investment, but if you are thinking of selling in the near future, you may wish to do a simple makeover instead.
Most new homeowners want to put their own stamp on their new home and will typically target the kitchen and bathroom first.
By cleaning up the kitchen, you will effectively remove the necessity for any potential purchaser to build the cost of an immediate kitchen renovation into their purchase price.
Simply remove anything dirty or obviously outmoded, such as chipped or mismatched tiles, bad paint choices and ageing appliances.
Chipped laminate or stained and dirty tiling grout should be cleaned or removed and renewed.
If kitchen cupboard doors are plain and in good order, think about upgrading by just adding new handles. This will bring the kitchen back into the present at very little cost. New tapware in the kitchen and bathroom have a similar ‘bang for buck’ effect.
Suppose you decide to do the complete kitchen renovation, keep the sanitary ware simple and white and any new tiling free of features that others might find hard to live with. In that case, not everyone enjoys a fruit and vegetable feature tiles in their kitchen, no matter how handcrafted and tasteful they might be.
How to pay for a kitchen remodel
You have several options for funding your kitchen remodel or other home improvement project. Paying for it from personal savings is always a good option. You could also consider refinancing or opening a home equity line of credit to fund the upgrades. You’ll just want to be sure to pick home remodelling projects that give you the most value.