Below is a post I did on my house blog about our remodel. I was hoping y’all could take a look and give an opinion on how reasonable you think my reasoning is?
Remodeling magazine has a very famous report they do every year called ‘Remodeling Magazines Cost vs. Value report’ I am going to use the values from the report to get a ball park figure for our house remodel.
The report is pretty neat. They poll a ton of contractors, estimators, appraisers across the U.S. to get numbers for the costs of the ‘standard’ projects they track. To get the payback numbers they then poll a bunch of Realtors to arrive at a consensus view. To me it seems like the cost numbers are much more closely tied to reality vs the value numbers which seem more like a consensus of opinion.
Here’s the main page of the interactive online report. You can click on your region and then if you’re lucky you can click on a more specific region where you live to get numbers tied to your reality as closely as possible.
The San Francisco Bay area numbers can be found here. Its no surprise that the costs for our area are higher than the national average by a good amount.
The left most column is what the job costs and next is how much that job added to the resale value of the house. The third column is the most interesting in that its the % of cost recouped.
The SF Bay area info is most interesting and different from the national in that several jobs return more than they cost! The national average only shows that adding a steel front door returns more than it costs! San Francisco truly is a world onto its own.
The jobs that had a positive net return were (these are for the mid-range projects);
- Attic Bedroom at 102.6%
- Deck Addition at 104.2%
- Window replacement (vinyl) 104.3%
- Window replacement (wood) 104.5%
- Minor Kitchen Remodel 112.2%
- Entry door replacement 119.2%
- Major Kitchen Remodel 100%
Hey that’s looking really good for us as several of the above are projects that we plan on doing!
The only project that apparently will lose us money is the master suite addition which only returns 86.2%.
According to the descriptions the jobs that sync up most closely with our remodel plan are, Major kitchen remodel, attic bedroom, deck addition, master suite addition.
Attic bedroom: Cost = $65,829 Value= $67,531 Description: Convert unfinished attic space to a 15-by-15-foot bedroom and a 5-by-7-foot bathroom with shower. Include a 15-foot shed dormer, four new windows, and closet space under the eaves. Insulate and finish ceiling and walls. Carpet floor. Extend existing HVAC to new space; provide electrical wiring and lighting to code. Retain existing stairs, but add rail and baluster around stairwell.
Major Kitchen Remodel: Cost = $67,789 Value= $67,815 Description:Update an outmoded 200-square-foot kitchen with a functional layout of 30 linear feet of semi-custom wood cabinets, including a 3-by-5-foot island; laminate countertops; and standard double-tub stainless-steel sink with standard single-lever faucet. Include energy-efficient wall oven, cooktop, ventilation system, built-in microwave, dishwasher, garbage disposal, and custom lighting. Add new resilient flooring. Finish with painted walls, trim, and ceiling.
Deck Addition(wood): Cost= $13,642 Value=$14,196 Description: Add a 16-by-20-foot deck using pressure-treated joists supported by 4×4 posts anchored to concrete piers. Install pressure-treated deck boards in a simple linear pattern. Include a built-in bench and planter of the same decking material. Include stairs, assuming three steps to grade. Provide a complete railing system using pressure-treated wood posts, railings, and balusters.
Master Suite Addition: Cost= $132,443 Value= $114,104 Description: Add a 24-by-16-foot master bedroom suite over a crawlspace. Include walk-in closet/dressing area, whirlpool tub in ceramic tile platform, separate 3-by-4-foot ceramic tile shower, and double-bowl vanity with solid-surface countertop. Bedroom floor is carpet; bathroom floor is ceramic tile. Painted walls, ceiling, and trim. General and spot lighting, exhaust fan; electrical wiring to code.
The attic bedroom, major kitchen remodel, and deck addition are pretty much exactly what we are doing. The Master Suite addition is not as this entails building a new part of the house on its own foundation with its own new roof. We are just mostly using the space we already have but with the new dormers, and earthquake retro-fitting we have to do I feel its comparable.
Now for the total average costs of doing all these jobs here in the SF Bay area……drum roll please…..
Total Average Cost = $279703
Total Average Value = $263646
Net loss = $16,057
Not pocket change for sure but the above cost number is about half what we were quoted by xxxx Construction. The above is an average and I used their mid-line numbers so there may be some wiggle room in that total but still…enough to double that number? I don’t think so…
As a mostly DIY’er I can look at those cost & value numbers in a different way. If I can do those same jobs for significantly less than the value they add they should all pay back even more. If by doing some of the work ourselves we can get the master suite number below $100k we’ll supposedly make money on all this when we sell the house! Ya right….
It is encouraging though to know that if you do the work yourself and do it decently well you can achieve a net payback when you sell…that is, if you believe these numbers…
Using the Upscale numbers where they exist (these projects really don’t match ours if you read the descriptions as they are waaaay fancier than what we are doing) you get a total of…
Upscale Total = $507876
Still less than the cost we were quoted…for work that is fancier than what we’ve spec’d.
Looks like we are going to be shopping the plans out to some construction firms with less overhead than what we’ve been dealing with.
Replies
Try Craigslist
A contractor from craigslist to do a list of projects like that?? Then we'll get a bunch of threads asking how to fix all the lousy work. The OP may not be willing/able to afford everything he wants done.
Thanks, Dave, Barry for your helpful, insiteful comments...oh, wait...
I know these kinds of posts bring on the hate but the point I am asking, and if you read all the way through I don't see how you could of missed it, is, that is using the SF Bay are cost vs. value ave numbers is that a reasonable way to ball park costs and if I have a bid that comes in at double the aveerage numbers maybe there is something going on there?
Do you wanna argue that the cost numbers in the study are way outta wack? As in too small? That's a possiblity but they poll contractors in my area for these numbers, they're apparently not pulled outta thin air.
So if there a reasonable amount of truth to the average costs and my proposed projects line up pretty closely with the descriptions shouldn't the bids I get come in, in a range close to the average?
Why is that where you advertise? I don't really shop the MFM erotic services section.
# Attic Bedroom at 102.6%
# Deck Addition at 104.2%
Four digits of precision?? Yeah, right.
Right now you don't know within 20% what your house is worth.
Yes Dan I agree that level of precision is kinda silly.
That and the value numbers come from polling real estate agents, appraisers, I think insurance adjusters too, in my area. Which to me gives an inherent fuzzyness to the numbers that the cost side probably does not have.
What I thought was interesting is that the SF Bay area numbers were so different than the national averages.
Now that could just mean that all the real estate agents in my area have their heads up their you-know-whats too...
A lot depends on where local property values were on the roller-coaster at the time that the survey numbers were extracted. And which numbers were used -- Jan 09 or Dec 09 (or maybe sometime from 08, for that matter). If they used, eg, (bubble) property value numbers from 08 and (depressed) construction numbers from 09, then the ratios could be way out of whack. And you've got no guarantees that they were consistent in the dates of the numbers vs, say, LA or Sac.
Point is, as always, unless you're in the flipping biz, don't remodel to increase property value, remodel to improve the utility of the house to YOU. Yeah, you can use figures like you quote to "inform" your decisions, but don't try to take them to the bank (literally or figuratively).
Dan, very funny. I need to weigh my home and see what it is worth in horse poo to be able to place any value in it. In fact, the horse poo might be worth more. :)
'Four digits of precision??
'Four digits of precision?? Yeah, right.'
Ya git that rite...
Muss bee using my spelcheeker and the modeling program from the climate change boys
Hi JunkHound,
Ya 4 digits or precision seems silly... Especially on the value side as its basically just a collection of opinions for real estate professionals.
I'd like to know the standard dev along with the averages. I thought I read somewhere on the site that they had 'confidence intervals' for the aver numbers but I can't find that info now. I seem to remember it was a couple of %
I've asked about the
I've asked about the 'believablity' of the 'Cost vs. Value' numbers on breaktime before and I got the general feeling that the numbers where not total b.s.
This question is for the pro's. When they release the new cost vs. value numbers you don't go check em out for your area and see how your costs compare?
As far as the Diy part, all I can go by is own history.
Bought a house in 1994 for 115K, put $1,150 worth of improvements plus own time into enlarging and finishing basement, sold in 1999 for $178K, no capital gains tax either (son livedin it during that time). Housing bubble had not started yet but part was just plain inflation.
Les see, les 20% inflation, that is 2,382.60896% ROI, or about 263 $/hr.
Back in the 60s my dad bought a farm where the house appraised for $4K. He put something like $15K (and sweat) into it and it reappraised for $35K.
But that was an anomaly -- the house was junk and was turned into something nice (that would probably appraise at $150K or better today -- rural Louisville market). You're never going to see the same deal on a house that's in good condition.
(And the housing bubble was well underway by the late 90s.)
Regarding the numbers in that study: I've never looked at them carefully (in spite of getting the mag for several years now) and don't know if they're reliable. I suppose they could be used in a loose way to determine whether (a) a project is viable at all, i.e. is a 'major kitchen remodel' within your budget, and (b) whether contractors giving you proposals are way out of line.
Said it before and will say it again, the only way to really close in on a thing like this is to get good plans and specs ready, and then get proposals from appropriate contractors. I know this can be an azz-backwards process... you spend time, money, and effort on design work, then go out and solicit proposals only to find out that the project is 150% or 250% of your budget. I recently estimated a house at $800K for someone who wanted a $500K house, and whose architect had said they were designing such.
Maybe the best option is to seek out design/build contractors who can evaluate your budget up front and help spec the project to fit. Ask them for a preliminary meeting at which you lay out the desired results and the desired budget, and see what happens. The guys/gals who can do this are not going to be found on craigslist, that's for sure.
Focusing on a contractor's supposed overhead is misguided. You absolutely get what you pay for. I ran work for three different Bay Area outfits of different sizes, all priced work similarly (because the market is competitive and people know how others are pricing work), and there were no deals to be had when quality work was needed. For the scope you listed above you want a contractor who has significant capabilities and skills. Go for the low overhead guy and you'll be paying him to wait in line to rent scaffolding and other stuff that a real outfit would own.
Plan C would be to piece it together yourself with help from a few freelance types. I have not gotten the impression from your posts that you have time to GC your own job, and the better tradesmen will steer clear of those deals anyway, no matter what the economy.
Hey Dave and thanks for giving me a real reply.
I'm sorry in that I've been unclear possibly.
I did contract with a design-build firm and they did draw up a complete set of plans that they consider 'permit ready'. As part of the design contract they are supposed to submit to me a detailed scope of work with pricing broken out. That has not happened yet except for them giving me a ball park number that is twice what we wanted to spend.
Now the place that I contracted with is a quality firm with lots of overhead. They sub out most of the actual construction work except for the rough carpentry.
My thinking is that I need to find other local quality gc's who specialize in remodeling old houses with good references who run a 'tighter ship' so to speak and who do the majority of their work in-house.
Of course among this group I would not go for the lowest bidder but don't you agree that on average this groups costs should be less than the big fancy-pants design build firms?
I've identified a handful of local guys that meet those specs and I've sent them copys of the plans. I haven't got any bids back yet but unfortunately I've received an earful of problems they are having with the plans. They say that the engineers portion of the plans are woefully inadequte and unclear with major issues left out....
I have of course offered to pay the 3-4 guys that make the short list to do up a real full-scale bid with 4 digits of precision.
On your scaffolding comment. The big fancy=pants design build firm doesnt even own their own scaffolding? I saw that line item and I was like what? Hell even we kinda 'own' scaffolding.
Did these design/build guys ask what your budget was??
We didn't want the project
We didn't want the project 'designed down' to hit a specific budget number so we were a bit cagey on what our budget was.
We did tell them that we had, had 2 other design build places give us WAG's (based on our own plans drawn up for what we thought we wanted to do) and that, those numbers where waaaaay outta our budget. The numbers the first two places came back with where ~$500k.
After looking over our plans our project mgr said she thought that $500k number was way outta line and that they should be able to do it for like half that. Which was a number that was within our means.
After going thru the entire design build process the plans we ended up with were barely different than our original ideas and the number they came back with was ~$550k....
So maybe we were suckers and the project mgr told us what we wanted to hear and we believed it.
What I am doing now is attempting to get real numbers for the plans from a different niche. If those numbers all turn out to be closer to $500k than not then we will be forced to change tact.
Though I still say that looking at the cost vs. value numbers seems like a reasonable place to start to get an idea on what it should cost and the fact that the high end design builders were all double those average numbers is telling.
I don't know what you mean by
I don't know what you mean by "it's telling"... If the respected players in your market are bidding 2x what the survey says, then what good is it? I get the feeling that you're looking for someone to bid at what the surveys says they should, which makes no sense to me. So far you've stated that one outfit bid at $500K and the second one at $550K? I don't see how a price of $250K is forthcoming from anyone unless they're desperate, lousy at estimating, or wicked with the change orders, or some combination of the three. Call me rigid, but to me there's only one way to shop a project like yours, and that is to get decent plans and specs together, get referrals for decent companies, and see who will price it out. I have hired out many millions of dollars of work doing roughly that process and it gets very easy to see what the work is going to cost, fairly quickly. You have your outliers, but there's almost always a cluster in a certain range.
Well of course as the person writing the check I'd like the number to be as small as possible.
The point I think I'm trying to make is (if you believe the numbers from the study), I apparently originally identified firms out on the high priced tail of the bell curve, and hence I need to focus on GC's who are more closer to the average price.
For instance I don't need a 'color consultant' to tell me what flavor of off-white to paint my walls (swiss mocha or sea froth). Actually when we are done there wouldnt be a white wall in the hosue anywhere.
Not like anyones keeping track but I thought I'd add this.
Got several real bids back to our project using the plans and they came in at around the same range the high $200k range.
This seems much more palatable than the $550k numbers I was getting from the high end places.
Actually the numbers were inline with what the cost vs. values numbers said they would be.
That's real interesting. By
That's real interesting. By "the plans" do you mean those that the design/build company made or did you have a separate set made up? I ask only because the few design build plans i have looked at often leave a lot out because they know who is looking at them so they don't need to spell out details, and also the prints are usually property of the company, so they really "shouldn't" be used for bidding purposes, depending on what your deal with them was.
Anyway, that big a difference would be telling me to get another opinion or better understand why the price was so much lower, so you don't have a nasty half done surprise in a few months.
The design-build agreement was for them to do a permit ready set of plans so they are supposed to be at least that complete. I've got a door, window, cabinet schedule, what I'm missing and I know they created was a finish schedule.
The deal I have with the design-build is that, no they don't own the plans and I'm free to do what ever I want with them, I also own the electronic copies in Chief Arch.
I think the big diff between the high $200k number and the mid $500k number has to do with overhead.
I actually received a couple of other bids one that was $150k!! Which I can tell from his break out on the bid he was leaving a LOT out. To one guy that just did a b.s. rough sq ft. number and came back with $350k.
The two bids that I am considering are broken out enough and with allowences that right now it doesn't appear that they've missed anything major but I'm still weeding thru them to make sure I'm comparing apples to apples.
"On your scaffolding comment. The big fancy=pants design build firm doesnt even own their own scaffolding? I saw that line item and I was like what? Hell even we kinda 'own' scaffolding."
I doubt if any contractor, except possibly a very large one, is going to own enough scaffolding including frames, braces, handrails, and planks to stage a building of any size to OSHA standards. Plus have a yard to store them in. A few frames sure, but not enough for a real job.
That's why there are scaffolding companies with yards of equipment, trucks to transport them and large men to put them up. Let alone the proper insurance. At least in the big city where you live.
John
I own about 20 sections, and have found it well worth the money. It is prohibitively expensive to have scaffold erectors put up small areas (and there isn't one in my market anyway). Renting stuff like small amounts of scaffolding, hammer drills, concrete mixers, and whatnot is a real headache when it comes to workflow, and IMO a contactor charging professional rates shouldn't be adding the rental of small stuff to the customer's bill. Obviously everyone has to make their own choices about what works and does not work in their business, and we're all doing different jobs under different circumstances. If I had to set up all the way around a two story house I'd have to deal with renting more or getting it done for me, but most of the time we are setting up one side, and we often move or modify it as the work progresses.
David, I take your point about renting small amounts of stuff as counterproductive.
As I remember the OP has a two story (or 3) house and my assumption was that the whole house would be staged. That's what I would do as I understand the scope of the project.
So my real point to this discussion is that a line item for scaffolding is pretty legitimate. And if the OP thinks this is frivolous then he might have some other misconceptions about how his job would be run and costs involved.
John
No argument here. When I saw "window replacement" I assumed that either ladders/planks would be used, or a few sections of scaffold moved along as work progressed. Part of my bias is that renting scaffold here can be a real PITA, because there's not enough available and it's often all gone.
Hi John,
No I didn't think
Hi John,
No I didn't think that the line item for scaffolding was frivouls exactly, I was really just responding to Dave's post.
I'm trying to not have any misconceptions about this job. That's why I started this post about if the remodeling cost vs. value numbers where in any way legitimate and if budgeting from them was in any way reasonable.
The problem i have with using averages and statistics for this is that they are almost allways used for someones benefit.
So they can be scewed by really large factors.
When ever someone starts using statistics in a conversation I allways try to remember that this person is trying to gain something.
To much emphasis has been but on this in our culture.
Most of the time this is how people or organizations scr** people over and justify it.
After all, numbers never lie. Yea, right.
Ya I can see your point.
But these numbers come from a magizine geared to contractors-remodeling professionals.
If you wanted to guess at a hidden agenda wouldn't it be to pump up these numbers? The higher the value numbers are the better for a contractor trying to sell a job right?
It's just that human nature
It's just that human nature being in the sorry state that it is, and with the state of our culture going backwards as far as I can tell, you never know what people are doing.
"Oh, what a tangled web we weave, When first we practice to deceive!"
If you can sort it out let me know.
As far as " a magizine geared to contractors-remodeling professionals".
I've know a few guys who were professional contractors. Mind you, only a few.
They would never even consider taking some sort of poll. They just don't have the time or desire.
I worked for a cabinet shop for a while and in his front sales area he had trade magazines on the table. I asked him about them and he just snorted at me. I never read those!
And realtors? I don't know if I've ever known a professional realtor.
I take that back. The last one we used did a great job for us. But he did it part time for people he really wanted to help.
He didn't need the money. He was professional because of his integrity and training from his career.
So, as to whether or not the Remodeling Magazines Cost vs. Value numbers are legit or not.
One of the fancy-pants design build firms (from the first round of this) just got back in touch with me. They were doing cold prospecting I think looking for work.
We had a talk about the cost vs. value numbers and if they thought they were legit.
They were pretty honest. They said that it seemed like they were legit but that they were a 'high-end' place so their numbers would be much, higher than the average.
Nothing in anything I've told any of these people or nothing they could of seen with their own eyes would of led them to believe that we had a super high end budget. This particular design build firm spends most of their time redoing multi-million dollar homes for millionares.
Good for them really, I just can't see how they ever could of seen a place for them in my world?
dan.... the devil is always in the details ...
i read the cost vs. value most times....didn't do it this year
my impresion was it was a good way to get general ideas of RELATIVE values of things
and RELATIVE values of different areas of the country
but in terms of pricing ......i don't know how they arrive at the numbers
first...who is their base of respondents... if they represent a cross section of say... all licensed contractors in a given area
next.... lets take a kitchen......who defines the scope and specs.... remodeling mag....or the respondents
if it's remodeling what is their criteria ?
if it's the respondents .... do they each report the cost of all the kitchens they did ?
or was it a sf price... or what?
lets say... the base wound up being 100 kitchens...all different... from 25 contractors.... i would expect the range to be $20K to $200K.... add them all up and divide by 100?
so how does that compare to your kitchen?
i'm with dave.... the plans , specs, scope , contractor and owner will all determine the final COST... the quality will depend on the track record of the contractor.... no silk purses out of sow's ears.... i wouldn't expect someone doing poor quality to all of a sudden get religion
sometimes you can get good craftsmen who don't know their "busines" to price below market.. but sometimes they just get in over their head and then can't deliver
i find the cost vs value interesting... but it has nothing to do with designing or pricing our next project
Ya good points all.
The survey sets the parameters so all respondents are at least replyng to the same exact 'kitchen remodel' specs and what not.
How the respondents come up with a number is a good question. I doubht they do a real serious estimate for free for some magazine.
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