Recently a client ask me how an investment in remodeling his closet might impact the resale value of his home. I don’t blame him. We were talking about a high end, custom wood closet that could run over twenty thousand in cost. So, conscientious businessman that I am, I set out to find an answer that would satisfy my customer’s concerns—even though I already knew what it was.
Like many folks these days who have let their library card expire, I began my search with Google, then the archives of Closets Magazine. No luck. But then mysterious cosmic forces aligned with my desire—and the next morning I opened my email inbox to the headline, “Cost vs. Value Report” in my monthly issue of Remodeling Online. “Hallelujah!– Heaven’s door had opened and spilled out gold. But my joy didn’t last long. Conspicuously absent from their data was any mention of closet upgrades or remodels. When I mentioned my quest in a conversation with Allen Voivod, marketing content consultant at Epiphanies, Inc., he gave the subject a mention in his Ah-Ha blog. Allen observed that Remodeling might be a tad short-sighted in their omission of this category. His point was that the cost of a major closet remodel was on par with or greater than that of many of the bath, window, and deck addition projects that they were tracking.
Look at the case at hand:
The cost of the custom master closet at $20K+, along with the pantry and mudroom closets we had already installed, totaled out at over $25K. And it's certainly not unique to sell a job at that price level or even much higher. It's one thing to prattle on to a customer about the glorious resale value that new closets will add to his home---this is the industry mantra---but it's quite another thing to be able to put the issue in any financial perspective with any real data. As mentioned earlier, I have been plodding through the archives of Closets Magazine, the industry business info maven, with no success so far, as well as the contents of the latest Freedonia marketing study of home organization products which appears to be focused primarily on demand.
Let's look at the numbers we do have.
The Remodeling report does mention closets as part of a master suite addition, which it further divides into two categories: master suite addition and upscale master suite addition. The numbers for both are pretty similar in our part of the country, the New England region, around 70%. They define this project in terms of features, like total square foot area, bathroom, walk-in closet, millwork, French doors that open onto a deck, etc., total cost, resale value, and percent of cost recovered at resale. Should we assume that a high end closet upgrade from wire to custom wood in an otherwise spectacular master bedroom suite will yield a similar 70% return on investment? Rule number 1 aside, who the heck cares? (Rule number 1: never assume anything.)
In my opinion: Forget all the statistical voodoo.The way I have answered the question of resale value for my customers over the past thirty years of doing remodeling work is to return the same question to them, "What is it worth to you?" Ask yourself how any home improvement you are considering will impact your everyday quality of life, from a functional and aesthetic, as well as an economic point of view. For me it all boils down to two questions: Will it make you and your family happy for years to come and can you afford it? Unless you are screaming and cheering a heartfelt YES! to both of these questions, your return on investment will probably fall short.