”Question…”
Ask yourself...would you invest in a stock if you knew you would lose 30% of it's value?
Let’s be ultra clear upfront…this article is not for the homeowners expecting to never sell their home. If you plan on retiring and living out your days in your home, then you already know that return on investment (ROI) is meaningless. This is because YOU, not the next homeowner, will be reaping the rewards of your labor, or the cost of labor anyway.
However, the homeowner that thinks renovating will make them the most money, is the biggest loser in the kitchen renovation game. Losing 30% of the kitchen renovation cost is worse than the first-year depreciation of a new car. Common sense would say, you’re better off selling at a discount equal to or less than the 30% loss on investment.
Actual Cost to Renovate a Kitchen
According to Better Homes and Gardens, the median cost to renovate a kitchen ranges (no pun intended) from $12,000 for a small kitchen up to $20,000 for a larger kitchen. This means, if you spent $20K, you’ll only get about $14,000 more for your house. In other words, you’ll lose $6,000 compared to not doing anything at all. Add to that, the 6% you’ll end up giving to the real estate agents, and you’re down quite a bit of equity.
Another perspective
I was in the mortgage business for over 20 years. In those two decades, there were two things that were most important to my customers – interest rate and closing costs. Both of them made sense. Hell, I’m a consumer as well and I too watch what I spend. What didn’t make sense to me was how aware customers were of cost on the loan but seemingly oblivious to the cost of selling their homes.
How can I Save on Kitchen Renovation Cost?
The more complex answer to this is, get a contractor license and start up a home renovation company. Then use your contractor discount and do the renovation yourself. This of course, isn’t a realistic solution.
The more realistic and cost-effective solution is to sell your home to a cash buyer. A cash buyer won’t require you to fix up your home and you won’t be spending out of pocket money to renovate.
Although the sale will more than likely be at a discount to offset the renovation costs, you will net more money at closing. This is of course assuming you sell the home for more than it costs you renovate plus real estate commissions plus closing cost. By doing that, you will always walk away with more money. That doesn’t even count the time and stress spent renovating.
In the end, the objective is to walk away with the most amount of money. The less you spend, the more you get.
