In today’s hot housing market, more people are able to sell their property as-is due to the low housing inventory and the high demand for homes. For buyers, this means that repairs and remodels they expected to be completed prior to a home’s listing are no longer happening. Instead, buyers must now plan for home improvements as part of the cost of buying a home.
This shift comes at a time when home improvement projects are rising. Basic kitchen renovations can run anywhere from $5,000 to $50,000+ while a roof replacement can cost between $8,000 and $22,000. Buyers must determine if these costs, combined with the purchase price of the home, are worth the cost or if they should look elsewhere.
Basic Renovation Costs
How much does it cost to improve a home? In general, these upgrades and repairs are among the higher costs of homeownership. Knowing what the average price is for renovations may help you evaluate early on whether that “as is” home is really for you.
Here are the average cost of major home renovation projects. Keep in mind there are lots of variables involved in any project, such as the size of the space, the materials needed, demolition, delivery and waste removal, replace versus repair, etc. All of these will come into play as you work through how to manage finances successfully through the renovation.
- Roofing: $8,000 to $22,000
- Kitchen remodel: $5,000 to $50,000+
- Heating, Ventilation and Air Conditioning: $5,000 to $10,000
- Bathroom: $6,000 to $20,000
- Flooring: $6 to $10 per square foot
Flooring example: At $6 to $10 per square foot, replacing the flooring in a 330-square foot living room can cost around $2,000 to $3,300. For a 1,500-square foot-home, redoing the flooring could cost between $9,000 to $15,000.
There are many factors that go into the cost of a renovation project. For example, a roof replacement seems pretty straightforward but the process involves several steps, each with its own line item cost: removing the old roof, repairing any rotting timbers or supports, purchasing new roofing materials, insulation, labor costs and removal of waste materials.
Evaluating the Costs to Remodel a House
With an idea of the cost of popular renovation projects, buyers will have a better understanding of the money need to improve a home. Evaluating such costs is key so during open house visits, be vigilant, ask questions and note any work that you think needs to be done in a particular home. Then factor renovation costs into your calculation when you consider making an offer on a home.
Next, work with your Real Estate agent to see if any of this work could be submitted as part of your offer, meaning that you’re asking the work be done by the seller as a condition of sale. If your agent comes back and tells you the offer was accepted then you’re on your way to homeownership. But if the seller rejects those conditions and provides a counter-offer without them, it’s time to reevaluate the purchase if you have to absorb the out-of-pocket costs for those projects.
Financial Requirements to Buy a House
No matter where you are in the home-buying process, it’s always a good idea to ensure your finances are ready. Most home renovation budgets have a percentage set aside as a contingency in case something doesn’t go exactly as planned. As seen on home improvement shows, there could be unexpected repairs waiting once a wall or bathroom shower stall is removed during demolition.
Once you’ve set a renovation plan and budget, stick to it as much as possible. While it may be appealing to add upgraded materials or features than originally planned, this will wipe out your renovation budget quickly.
If you’re just starting your home-buying journey, Travis Credit Union can help. Attend one of our free webinars such as Home Buying 101, Understanding the Importance of Your Credit Score and Organizing Your Financial Records. You can also check out our Frequently Asked Questions to get answers to commonly asked mortgage questions.
Ensuring you have good credit when buying a home will help you get lower interest rates. Read How Your Credit Score Impacts What You Pay for a Mortgage to learn more. You can also instantly raise your credit score through Experian Boost™.
Ready to Buy
If you’re ready to buy, start an application online. If you’re not sure where to start, get in touch with a TCU mortgage loan consultant and we’ll walk you through every step of the process.