Does it make more sense to remodel or move? Best answer…..”it depends”. If you love everything about your house except the kitchen, and you can get what you want with a remodeling budget of about 10% of your current value, it probably makes sense to stay and put the money toward a happy future, right where you are. Why 10%? I say this because the cost to move is easily 10% after real estate commissions, seller paid points, and possible repair items that need to be completed before the sale will close. This does not even include the expense and hassle of moving. Maybe your breakeven is higher than 10%, all things considered.

How do remodeling projects affect an appraisal?

This is a common question and there is only one true answer. Not a very helpful answer, I realize….. “It depends.”  But I do have a framework for you to consider that has been helpful to many.

Imagine yourself paddling a canoe in a river. If you are paddling with the current, you will make lots of progress. But if you are paddling upstream against the current, you will get more exercise than distance.  The current in the river represents the change in your local real estate market. Your paddling effort represents the expense of remodeling.

Assume you own a house in average condition worth $400,000 and decide on a $60,000 kitchen remodel. How much does the new kitchen increase the value?

One way to gauge this is to wait five years and sell the house. If the house sells for $460,000, you got your money back, right? Not so fast. That is $60,000 worth of paddling, but you need to know if you were paddling with or against the current. If you had not remodeled, it may have sold for $440,000. So maybe the true cost of remodeling is $60,000 minus the $40,000 of market increase.

The best way to know the value of remodeling is to compare houses like yours in the current market. You may find that the houses with remodeled kitchens are selling for 10% more than those without, other things being equal (they never are). Appraisers are trained and experienced in doing this. I welcome your call.