Kitchen Remodel Return on Investment for Sellers

A common real estate adage says “kitchens sell houses,” and it’s true — for the most part.

Kitchens are definitely something buyers pay close attention to. According to the Zillow Group Consumer Housing Trends Report 2018, 58 percent of buyers who purchased in the last 12 months said having their preferred style of kitchen was extremely or very important to their home-buying decision.

But investing thousands of dollars into a full kitchen transformation before listing your home for sale might not be the best investment. Unless your kitchen is extremely dated, dysfunctional or damaged, the odds of you seeing a 100 percent return on investment on a kitchen remodel is rare. However, giving your kitchen a mini face-lift can be enough to compete with other homes on the market without breaking the bank.

Types of kitchen remodels

Remodeling magazine, an industry leader in tracking remodeling cost data, splits kitchen remodels into two categories: minor and major, with major remodels broken down into midrange 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.

Remodeling 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 an upscale major kitchen remodel, you may take many of the same actions, but the finishes will be higher quality — think top-of-the-line custom cabinetry, stone countertops, high-end appliances, an imported ceramic or glass tile backsplash, an undermount sink, a faucet with water filtration, and upgraded lighting, which could include general and task lighting, as well as undercabinet 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 percent of the money you spend on renovation.

In fact, many people decide to remodel instead of selling, because of low housing inventory over the last few years. According to the Zillow Housing Aspirations Report, 76 percent of Americans surveyed would rather use a set amount of money to upgrade their home to meet their needs rather than use it as a down payment on a new home.

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, local market and the level of renovation you do. Remodeling magazine’s Cost vs. Value Report 2018 breaks down the average home sale return by region and scope of project.

National minor kitchen remodel ROI

  • ROI: 81.1 percent
  • 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.

  • Homeowners in the Pacific region (California, Hawaii, Washington, Oregon and Alaska) see the highest minor kitchen remodel ROI at 92.9 percent, based on an average kitchen remodel cost of $23,587 and an average recouped cost of $22,181.
  • Homeowners in the West North Central region (North Dakota, Minnesota, South Dakota, Nebraska, Iowa, Kansas and Missouri) see the worst ROI of all U.S. regions at only 67.6 percent. That’s with an average kitchen remodel cost of $21,455 and an average recouped cost of $14,532.
  • In the rest of the U.S., the average ROI for a minor kitchen remodel is between 73.4 and 83.8 percent.

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 percent 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 remodeled 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 remodeled 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 you 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 to get 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.

Where else could I invest my money?

If you’re in a region where a minor kitchen remodel doesn’t have high returns, it might be worth considering a home improvement that does. Here are a few examples.  

In the West North Central region (including North Dakota, South Dakota, Minnesota, Nebraska, Iowa, Kansas and Missouri), a minor kitchen remodel only ranks seventh in terms of ROI. Adding midrange manufactured stone veneer to the home’s exterior has the highest recoup of any upgrade — 82.8 percent — followed by garage door replacement at 82.4 percent.

In the West South Central region (including Texas, Oklahoma, Arkansas and Louisiana), the higher ROI projects are midrange manufactured stone veneer (93.4 percent) and a midrange wood deck addition (82 percent). An upscale garage door replacement is tied with a minor kitchen remodel at 80.8 percent.

Does my kitchen really need remodeling?

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 remodeling first might be your best bet.

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 moldy 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 discolored 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 undercabinet 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.

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