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Cost Versus Value

Before we get into the topic of the cost of a project versus what it would return on resale, I should reiterate the importance of sewer scopes in your transaction. Yesterday’s scope revealed a party sewer that will have to be repaired and separated. In another instance, we had a property that a buyer did not get their offer accepted on in the spring. I’ve heard that the sewer backed up two feet into the basement and when it was unclogged, the scope revealed a busted party sewer. Now its the buyer’s problem.

Sewers are the least sexy place to spend money on a home. If they work, no one cares. If they don’t once you fix them, no one cares because they are expected to work. The cost (easily upwards of $5,000) doesn’t add $5000 in value to home.

According to NAR, a wood deck addition adds 108% of the cost in value in the Pacific region (KA, CA, HI, OR and WA) but only 71% in the East South Central region (AL, KY, MS & TN). For the Pacific:

Vinyl window replacement: 100.7%
Wood window replacement: 103.4%
Bathroom addition: 83.5%
Minor Kitchen remodel: 103.5%
Major Kitchen remodel: 88.9%

I’m not sure how valuable this information or theory is. Does the ratio really provide any insight into what a seller should do or a buyer will appreciate? Value is largely subjective.

2 Comments on “Cost Versus Value

  1. “I’m not sure how valuable this information or theory is. Does the ratio really provide any insight into what a seller should do our a buyer will appreciate? Value is largely subjective. ”

    Apparently it does. Otherwise why post the numbers? I know that I will now have a minor remodel done on my kitchen since it will pay for itself ten times over (1003.5%).

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