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Seattle-area home sellers often face a hard question. Does it pay to remodel a house before selling it?
The easy answer is: It depends. Studies by the National Association of REALTORS®, among others, show that almost every major renovation project, like a new kitchen or bathroom job, will be a loss for the seller in a home sale.
NAR’s national remodeling studies also emphasize caution. Home sellers can potentially lose tens of thousands of dollars on renovations that fall flat with buyers.
Of 11 interior remodeling projects NAR studied in a 2022 national report, just three types of work—refinishing or adding new hardwood floors and replacing insulation—were projected to pay for themselves or increase the seller’s profit in a home sale.
Several common interior projects are “money losers,” according to NAR. When homeowners undertake these major remodels, they rarely add enough value to the home to pay for the work. If a home seller, for example, were to spend $80,000 remodeling a kitchen and $35,000 on a bathroom then sell the home, they could expect a dollar-for-dollar loss of $20,000 and $10,000 on those jobs, respectively, NAR projects. If the seller were to build a new primary bedroom suite costing $172,500, the loss would be $72,500.
The story is the same with outdoor upgrades, according to a 2023 NAR survey. Pools, decks, patios, among other common outdoor projects, are usually losers when evaluated on purely investment terms. The exceptions are landscaping and lawn care and adding an outdoor kitchen, which tend to recoup the investment.
NAR’s Deputy Chief Economist Jessica Lautz said the association’s estimates don’t account for regional differences and local conditions. Identical homes in different ZIP codes can yield different results. Also, NAR’s surveys suggest that when homeowners remodel, they tend to be happy with the improvements; remodeling can improve their living condition and quality of life.
The biggest mistake home sellers make isn’t necessarily undertaking a significant renovation, Lautz said — it’s doing so without consulting with a competent real estate agent beforehand. Sellers often remodel according to their tastes.
“One could invest too much in a highly personalized remodel,” Lautz said. “That would probably be the biggest mistake if someone is going to put money into remodeling or even staging a home. So, they really need to appeal to the broadest range of potential homebuyers.”