Does It Make Sense to Remodel My House Before Selling?

Unless you can add value by getting contractor prices on materials and doing the work yourself, you won’t fully recoup the costs.

Doing a remodel to get top dollar for your house may seem like a no-brainer, but it doesn’t often result in a sale price worth the blood, sweat, and tears. Not to mention the financial risk.

Take, for example, the average cost nationally of a midrange bathroom remodel. According to the 2019 Remodeling Cost VS. Value Report, it’s a steep $20,420. The kicker is that the average resale value of such an update is only $13,717, only 67% of the out of pocket cost. This cost estimate doesn’t even begin to account for time, stress, or weeks of showering at the gym.

If you’re thinking of taking on a remodeling project either yourself or by hiring a professional, here are some factors to consider to maximize your investment and increase your odds of getting a desired outcome.

DIY renovations are harder than they look

Don’t be fooled by the steady stream of DIY TV shows and YouTube videos designed to make home renovation seem fast, affordable, and achievable for any aspiring home improvement hobbyist. Home improvement TV is “infotainment gold” created to inspire homeowners by over-simplifying very involved projects.

In fact, NerdWallet’s 2018 Home Improvement Report found that 35% of homeowners surveyed confessed to being led astray by DIY shows. With U.S. census figures estimating 43 million home renovation projects done between 2015 and 2017, that’s a lot of DIY projects ending badly.

Even people with plumbing, wiring, and woodworking experience run into issues that expertise can’t solve. For example, did you know that you likely need to apply for and wait to obtain building permits for any plumbing, electrical, or mechanical updates to your house? What documentary TV shows rarely tell you is that professionals can obtain permits much faster than even the most ambitious DIY-er.

Doing work without the proper permits may actually hurt your home’s value. If a building inspector evaluates the house and finds that the proper permits were not pulled, they can shut down the renovation project until you get them. What’s worse is that they can also require you to tear out any construction work that was completed, and raise the permitting fees.

Hiring a contractor? Keep your wallet open

It may be safer to hire a contractor to do major renovations, but this comes with significant financial risk. According to the KPMG 2015 Global Construction Survey, only 31% of public and private construction projects came within 10% of the originally quoted budget, and only a quarter of these projects came within 10% of the original timeframe. The rest of the projects had ballooning costs and/or serious delays, likely for one of the following reasons:

  • Failure to accurately estimate construction costs before the project. Contractors make money by marking up the materials and services that are provided for the project, such as labor wages, construction permits, equipment, insurance, administrative cost overhead, and taxes. Their management fees usually cost from 10% to 15% of the total project cost. However, by not considering market price fluctuations for materials and wages, the quoted price can end up being far lower than actual costs.
  • Failure to accurately account for the logistics of the renovation process. Sometimes the full construction cost estimate is correct but the logistical activities are way off. These include things like material ordering and deliveries, compatibility of materials, accuracy of component sizes, and demolition and installation costs. Scheduling activities to simultaneously vs. in sequence can drastically alter the project’s timetable.
  • The size of the project was larger than expected. Many problems in a house aren’t known until a wall is taken down or old flooring is removed. Hidden issues that arise after a project begins can increase the required construction work, raise costs, and push the timeline past its deadline. Sometimes, contractors will offer to perform additional work at a small price as you start to get into the mindset that the house needs the extra project to tempt buyers. These issues can turn a small renovation into a larger construction project very quickly that will drain away your available finances.
  • Deliberately misleading estimates. Unfortunately it’s not an uncommon practice for unscrupulous general contractors to intentionally low ball the pre-construction estimate and later file for a change order to increase the price. The challenge for you as the homeowner is making sure before you sign anything that you are working with a reputable contractor.

There are affordable alternatives to renovating and selling

If your money, time, effort, and sanity aren’t worth the return you (may or may not) get on a big renovation, there are plenty of easier ways to make your home more appealing to buyers. Instead of focusing on higher-end renovations, consider focusing on cosmetic changes that are lower in cost.

If you simply don’t have the cash to fix up your house and it’s not in the best shape, don’t be afraid to market the house as a fixer-upper. A 2019 survey performed by finds that 60% of home buyers are looking to purchase a fixer-upper house to save on costs. If you can weather the storm of an uncertain timeline and aren’t in a rush to sell, this is a potentially attractive option.

Finally, you can always avoid the real estate market altogether and sell fast to a cash buyer. While off-market sales aren’t for everyone, there are thousands of people who find that it gets them the best outcome when they need to sell a house that needs some love. This is why Sundae exists. Selling off-market means not having to deal with repairs, cleanings, showings, real estate agents, and the long wait times and stress of finding an interested buyer at a satisfactory price.

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Aubree Kendall

Aubree oversees construction at Sundae. She holds degrees from UCLA and UC Berkeley and was an academic fellow at Cornell. Her Ph.D. focus was in Real Estate Law & Litigation, and she led the Berkeley Haas School of Business Real Estate Team. She is a former Instructor at UC Berkeley and Professor at Mills College and has worked in real estate for more than 10 years.