ArcaMax

Reader Question: Would remodeling our outdated kitchen increase the value of our home? We do not plan on selling for five to 10 years, and appraisers often struggle to find comparable properties in our area. Is it worth spending the money? If so, what should be the ceiling of our budget?

Monty's Answer: A kitchen update can be both a lifestyle upgrade and an investment, but the payoff depends on matching the scope and budget to your neighborhood, local buyers' expectations, and how long you will stay.

No. 1: Start with your home's present market value. If nearby sales are scarce, ask a certified appraiser to provide a range using the cost approach, as well as the few comparable sales that exist. Suppose that range is $400,000-$425,000.

No. 2: Set a spending ceiling of 10-15% of current value. That rule of thumb has held steady for decades because it keeps the project proportionate to the price bracket buyers expect. In the example, your upper limit would be $40,000 to $60,000, inclusive of all costs.

No.3: Match the scale of work to the data. Costs for material, labor and home prices vary considerably from state to state. For this reason, I chose Home Depot's Cost to Remodel a Kitchen Guide as a source to gather data, as they operate on a national scale and specialize in building and remodeling homes.

No. 4: Factor in inflation and aging. Construction costs have risen roughly 4-6% per year since 2020. A project started today will compete with even newer kitchens when you sell. Favor durable materials -- solid-wood doors, full-extension drawers, stone or composite tops -- that still look fresh in 2035.

No. 5: Weigh intangible value. Modern layouts with better lighting, ventilation, and storage make daily life easier and can defer the cost of eating out. Industry surveys show owners rate "joy" from a new kitchen nine out of ten. That joy has economic value if it keeps you in the home longer and healthier.

No. 6: Plan for the appraisal gap. Because comps are scarce, appraisers may lean on the cost approach or outdated data. Keep a project binder that includes a signed contract, progress photos, invoices, manufacturer's spec sheets and warranties. Presenting that package with the appraisal request improves the odds the upgrade is fully credited.

No. 7: Stage your spending. You need not demolish walls to gain most of the return. If cabinets are solid, re-door and paint them; swap fluorescent cans for LED trims; add a tile backsplash; upgrade hardware and faucets; install a slide-in range. Minor cosmetic refreshes alone may return virtually dollar-for-dollar and keep you cooking during work.

No. 8: Safeguard against budget creep. Require fixed-price proposals, a paid-in-full lien waiver from every subcontractor and a 10% retainage until punch list completion. Build a 15% contingency, and do not tap it for wish-list items.

A final thought: While the information above is invaluable, the options you choose to carry out the project will also affect the cost. If you are experienced in the construction industry, have worked in new construction or remodeling and have established contacts, acting as the general contractor can save a considerable amount of money. For most homeowners, selecting a contractor to handle the project makes more sense. Check out my article, "How to Pick the Right Custom Home Builder", for more information on how to find a competent and reliable remodeler.

Richard Montgomery is a syndicated columnist, published author, retired real estate executive, serial entrepreneur and the founder of DearMonty.com and PropBox, Inc. He provides consumers with options to real estate issues. Follow him on Twitter (X) @montgomRM or DearMonty.com.

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