Remodeling for Resale

Michele Eich, owner of Minneapolis-based Eich Interior Design, a residential and commercial design firm, says most clients approach remodeling as a long-term investment in a home in which they plan to nest. However, she adds, “just recently, it seems that a lot of clients are remodeling to update or improve, mostly kitchens and bathrooms, to make their homes more competitive. And they’re looking at it for resale within three to four years. In the meantime, while they’re still in it, the house should meet their preferences and lifestyle needs. But they shouldn’t make it so customized, or make such a huge investment in it that they can’t turn around and sell it.”

In other words, remodel successfully, and you’ll heighten your chances for a hasty, high-profit home sale. Do it with less success, and you’ll likely wait months and wade through stacks of underwhelming bids.

“In order to sell the steak, you have to have the sizzle,” Havig says. “And the sizzle is getting the property in move-in condition.”

Spend in all the Right Places

Ask virtually any builder, remodeler, interior designer, or architect what their clients are clamoring for, and they’ll likely give you near-identical lists: kitchens, bathrooms, mud rooms, master suites, and great rooms—open kitchens that are integrated with the living pattern of the house.

“Great rooms are becoming a necessary space that people look for in homes. It’s a space where the whole family can kind of end the day and share their time together,” Eich says. “Making a space that could be a great room, whether it’s a new home or an older home, is definitely a place to enhance resale value.”

Baths and kitchens are among the top value-enhancing projects, according to Remodeling magazine’s “2005 Cost vs. Value Report,” which compared construction cost with resale value in 58 markets, including Minneapolis. Bathroom remodels turned in the highest three-year increase in recouped value, at more than 102 percent, while major kitchen remodels generated an average return of 91 percent.

Consequently, Eich says she encourages clients to devote the lion’s share of their remodeling budgets to these spaces and spend modestly on dining and living rooms and non-master bedrooms. New flooring and wall color are easy, inexpensive ways to dress up those secondary spaces, she says.

Yet those secondary spaces shouldn’t be ignored, says Pete Paulson, CEO of JP&Co., a firm in Bloomington that specializes in whole-house remodeling. Paulson contends that for a homeowner to maximize his or her remodeling dollars, the homeowner must refresh the entire house, inside and out. “The whole has to be greater than the sum of its parts,” he says. “In terms of value, if you just do a kitchen, for instance, and the rest of the home doesn’t measure up, then the value of the kitchen will not be as high.”

Havig agrees: “You have to touch all the surfaces.” And you have to do it thoughtfully and thoroughly—band-aid solutions won’t suffice, he says. “Say you decide to enamel the kitchen cabinets instead of putting new cabinets in, and you install white appliances instead of what’s going on now with the stainless [steel]. That wouldn’t get you any more money, and what would happen is the new people will just tear it all out once they get in the house,” he says.