In a Nutshell: Homeowners know that smart remodeling projects can add value to their home. But some projects increase home value more than others, and they aren’t always the most expensive ones. How do homeowners decide which updates to prioritize? Kukun gives homeowners tools to help prioritize remodeling projects that will add value. The company analyzes local building permits and neighborhood property values, among other data, to determine how much of a value increase homeowners can expect.
Home improvement projects are good investments, especially if homeowners plan to sell their property someday. But some remodels have higher returns on investment (ROIs) than others.
For example, homeowners should never remodel their properties beyond the value of similar single-family homes in the area.
Similarly, structural or design improvements, including finishing a basement or adding a wooden deck, will increase value for a longer period than technology updates or kitchen or bathroom remodels, which tend to become outdated more quickly.
The average cost recovery of re-siding a house is 75% to 83%, while a garage addition yields 60% to 70%. Smart homeowners pay attention to how much value a remodel will add to their home’s value if they decide to sell, but that information wasn’t always easy to find.
Kukun launched in 2014 to offer remodeling ROI and other remodel-related insights based on local data analysis.
That ROI information is vital to help homeowners make decisions about which remodels to pursue, when, and how extensively.
“Everybody’s trying to talk you into spending more or spending better. People are constantly faced with these challenges, and there are very few resources to guide people all the way through it,” said Kukun COO Scott Langmack. “That was the purpose for Kukun right from the beginning.”
Remodeling Cost Estimator Evaluates Local Data
A home is a significant investment, and homeowners have no shortage of improvement options, including additions, renovations, and repairs.
If owners need to replace the roof, for instance, they may need to decide whether to save money with a $14,000 replacement or splurge on a $45,000 job. But they need to determine if a more expensive roof repair translates to a higher home valuation.
They can use Kukun’s Home Renovation cost estimator, which provides renovation costs and home value ROI based on millions of data points.
“We have a team of leaders in the industry in home valuation. Our chief data scientist came from Zillow and Amazon, and we have a team of people who are valuation modelers and data scientists from Fannie Mae,” said Scott.
The Kukun team also pulls building permits from most cities in America every month. That helps the platform track the current condition of every home. In other words, if someone puts a new roof on, the company can calculate how much that modification will increase the value of the house.
Another part of Kukun’s analytics is its property condition score, which provides numerical values for the age of a remodel.
“Was the kitchen remodeled last year or five years ago? That gives it a different score. Have the bathrooms ever been remodeled? If not, then that’s a lower score. They basically age every component of the house,” Scott told us.
If homeowners are unsure how remodeling and updates impact home values, they can find plenty of insights on Kukun’s blog, which offers thousands of articles on how to remodel and why. For instance, one article titled “Small Bathroom Layout Ideas From an Architect” offers information for new bathroom remodel projects.
Helping Users Find the Right Contractor for Projects
Another valuable component of Kukun’s cost estimator is how it helps you calculate the return on investment your remodeling choices will have. The team arrives at that estimate by considering material costs and labor costs for cities across the country.
“We start with understanding that a bathroom of a certain quality might cost $28,000 in Oklahoma. That exact bathroom, with the exact same materials, would cost $68,000 in San Francisco. The difference is primarily labor,” Scott said.
Material costs also matter. Depending on how far they must be shipped, for example, the same item might cost much more in one location than in another. In expensive cities, warehouses that hold necessary parts can further compound the cost.
The cost estimator also helps homeowners decide how much they want to spend on the materials. If they want to replace a bathroom faucet, they can choose a faucet that costs anywhere from $20 to several thousand dollars. But how can the homeowner know the ideal faucet price point?
Kukun doesn’t itemize ROI down to a faucet, but the idea holds true for any kind of remodel. Homeowners shouldn’t spend too much on materials because the ROI is capped at a certain point.
“Let’s say you installed ultra premium upgraded appliances and light fixtures in your kitchen. People would walk in and say, ‘This looks great. I’ll give an extra $10,000 for this kitchen,’ even though you spent $30,000. So you just won’t make the money back,” said Scott.
The cost estimator can give homeowners an accurate idea of how much a renovation should cost when they connect with contractors. If one contractor bids $20,000 while another offers $50,000, the homeowners know which price is more on-target for their area.
Kukun Highlights Steps to Increase Home Value
According to Scott, homeowners interested in increasing the value of their home should focus on a few areas. First, curb appeal is important for impressing possible buyers right off the bat.
“Typically, exterior paint, trimming up the garden, and planting some happy flowers is a good idea,” he said. “Repainting or installing a new front door is another. If the front door is worn and tattered, the feeling is that a potential buyer is going into a worn and tattered house.”
Inside, homeowners should prioritize their floors. If a house has hardwood floors, cleaning and polishing them is usually sufficient. Carpets almost always need to be replaced because they are often worn in ways that turn buyers off right away.
Homeowners should also consider painting their walls before listing a home.
“There are certain trending colors that sell better. That’s one of the things we look at when we create our models; we spend a lot of time analyzing what the home flippers are doing,” Scott said.
If someone about to sell their property wants to undergo a slightly more extensive renovation, they should consider freshening up the kitchen or main bathroom by painting the cabinets or adding new sinks.
Scott recommends homeowners use Kukun’s iHome Manager when they’re ready to plan their next renovation project. The tool provides an overall view of the home and identifies areas of opportunity.
“On iHome Manager, we ask people a series of questions about when they did recent models. That allows them to make sure their home gets the credit for all the work they’ve done. And then that translates directly to a home value,” he said.
With tools like iHome Manager and the cost estimator, homeowners maintain more control of their home renovations and home value. And they don’t have to invest upfront and wait years to see how much a project impacts their property’s resale value.