When Is Remodeling
Not a Good Investment?

Question: We have a large, old home that we will probably put on the market in two to five years. The kitchen is in great need of repair and upgrading. The rest of the house is in good condition to very good condition. Does it make sense to put a lot of money into remodeling and making a "dream kitchen" or should we just do the minimum to make it workable and functional but without any major structural work or top-of-the-line cabinets and appliances.

We would love to have a dream kitchen, but can we expect to recoup the significantly higher cost when we sell the house in a few years? Will a dream kitchen make it easier to sell this large old house?

We'd appreciate your advice on this matter.

Answer: You're wise to be concerned about over-improving your home. While a kitchen offers you the greatest opportunity to get your money back (or even make a profit) from renovating, over-doing it will create a white elephant that's difficult to sell.

Old homes usually require a complete remodel to bring them up-to-date. However, as you indicate, your choices in remodeling costs are enormous. The decision on how much to do should be governed by your neighborhood norms. Assuming that surrounding homes are equally old, what have your neighbors done? When they remodeled did they put in granite countertops or tile at a third the price? Have they replaced all their cabinets or simply repainted or refinished them at a fraction of the cost? Did they get top-of-the-line appliances, or more modest ones? Knocking on a few doors and explaining that you're a neighbor who's about to renovate and is looking for ideas, will usually get you a friendly tour of nearby homes.

You should renovate to the standards of quality found in your neighborhood. That way when it comes time to sell, you can price your home at the same level as comparables... and make your remodeling pay. For more hints check out my book, "Tips & Traps When Renovating," McGraw-Hill, 2000, $14.95.

Mr. Irwin has more than 25 years' experience as a Los Angeles-area real-estate broker. He is the author of more than two dozen books about real estate and is recognized as one of the most knowledgeable writers in the real-estate field. Mr. Irwin's most recent book is "Tips & Traps When Buying a Condo, Co-op or Townhouse," (McGraw-Hill, 1999).

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Eli, New York

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