By William Rodarmor

Sooner or later, every homeowner will face a thorny question: How much should I invest in remodeling my home? We wonder if it makes sense to give that shabby but functional bathroom a new tub and toilet, order custom cabinets for the kitchen, or turn the attic into an extra bedroom. What we really want to know is, how much of the money I spend will I get back when I sell the house?

Conventional wisdom says that your best remodel project is an old bathroom or kitchen, and that you shouldn’t overspend if you’re selling soon. To expand on that advice, we talked with three East Bay people involved in remodeling projects: an architect, a contractor, and a homeowner. Along with their experience and advice, we got a plethora of tips and warnings. For perspective, we list some cost-return statistics from Bay Area remodels compiled by Realtor magazine.

“Kitchens and bathrooms are pretty much no-brainers,” says Lorin Hill, who heads his own architecture firm in Emeryville. “You always get your money back—unlike adding a deck or building out a basement—unless you go over the top and buy very expensive fixtures and finishings.” Hill’s firm does residential renovations and additions all over the Bay Area, and he knows about making budget choices.

“We recently did a spec fixer-upper in upper Rockridge for a realtor,” he says. “It was a classic situation: You take a cold, hard look to see what would most raise the sale price, without personalizing it too much.” Hill changed the layout of the dining room, did a stem-to-stern kitchen renovation, redid every bathroom, and more. But what he calls the “lynchpin” of the remodel was giving the master bedroom the bathroom it lacked. It was one of those intangibles that helped the house fit people’s expectations, he says. Was the new bathroom worth the $20,000-$25,000 it cost? “You always have to do a cost-benefit calculation,” says Hill. “The house sold for about $1.25 million, and at that price level, a master bath goes with the territory.”

Hill notes that you can probably rip out and reconfigure a kitchen for $50,000 to $75,000, but the final tab depends on the finishings and fixtures. Cabinets are a good example. “When it comes to resale, what initially matters is the look,” says Hill. “If you plan to live in the house for a long time, go ahead and order custom cabinetsæyou’ll get a more tailored product. But if you’re remodeling to sell, you can install manufactured cabinets and they’ll look OK without sacrificing quality.” When buyers are house shopping, he says, they usually pay more attention to surfaces than to solidity or function.

The same applies to light fixtures. “You can splurge or not,” says Hill. “There’s a big difference between a decent light fixture and an expensive one.” Here again, buyers and homeowners will have different priorities. A prospective buyer may not notice the number of light fixtures, how they are switched, or if they can be dimmed—but all three will matter to an owner who plans to stay put.

At the same time, Hill warns against “underdoing” the remodel work. “If you come in and do a ‘plain vanilla’ remodel, the house loses some of its appeal,” he says. People put a premium on things that improve a house’s visual appeal, the things that add to the “wow!” factor. The trick is to strike the right balance.

Jeff Altmann has been in business since the early 1990s, and knows the Bay Area real estate and construction scene. About 75 percent of his medium-size Berkeley company’s work is renovations, with 25 percent additions and new construction. But what makes Altmann & Associates unusual is that the company doesn’t normally bid on jobs. “We mainly do what’s called ‘negotiated work,’” says Altmann. “We’re chosen before or at the same time as the architect.

“In a negotiated job, an architect will propose a plan, and we’ll be asked to price it before it’s fully developed,” he says. The owner can then add or subtract things to make the project fit their pocketbook. “Most clients feel they have more control over their budget this way,” he says. “It becomes a dialogue from day one.” Altmann’s company has close relationships with a number of architects, including Lorin Hill, and tends to work with repeat customers.

Altmann explains that doing negotiated work is best for homeowners who have experience with other remodeling projects. “Most people who haven’t done a remodel need a price reality check, so it makes sense for them to get other bids,” he says. “More experienced owners have discovered that going with the low bidder isn’t always the best approach.” Having a contractor’s early input can help make a project easier to construct, and perhaps save thousands of dollars.That’s not to say that people aren’t astounded by what things cost, says Altmann. “I don’t know how many times I’ve seen full plans with full specs, and when the owner gets the total, he falls out of his chair,” he says. “Then we have to throw all the fun stuff out to bring the cost down.”

Altmann notes the wide range of costs, but agrees with architect Hill that many expenses are under the owner’s control. You can buy a faucet for $100, he says, or you can pay $500 for a beautiful designer faucet. Multiply that $500 by all the fixtures in the house, and you’re into big money. “Lots of people’s eyes are bigger than their pocketbooks,” he says. “I always warn people, ‘Don’t get carried away.’”

The wide cost range also applies to new construction. “You can build an addition or a family room for $200 a square foot or you can go up to $500 a square foot for the same amount of space,” Altmann says. “You don’t have much control over the cost of code and structural requirements; you do have control over the design and finishes.” He points to tiles as an example of an extreme cost range. “If you buy 4 1/4” ceramic tile, it will cost you $2 to $4 a square foot,” he says. “Glass tiles can cost you $22 a square foot—and the installers will charge you 50 percent extra, because they’re a real pain to install.”

Does that mean you shouldn’t ever indulge in something fancy? Not at all, he says, especially when a touch of class in a small area can make an area special. Says Altmann: “If you’ve installed a reasonably priced shower, for example, and you want to put in a glass wall, go ahead—but don’t do the whole room!”

The Homeowner: Mark Elliott

For Hill and Altmann, remodeling work means income. For Mark and Cynthia Elliott, it’s outgo. The Elliotts are three-quarters of the way through a major, multi-year remodel of their house on Lincoln Street in Berkeley. They have invested about $200,000 so far, plus a lot of sweat equity. A designer with West Office Exhibition Design in Oakland, Elliott has carpentry and other practical skills, but he also has a quality every remodeler needs: endurance. A distance runner, Mark plans to run the 100-mile race from Squaw Valley to Auburn in June.

The most dramatic part of the Lincoln Street remodel was raising the one-story house in 2002. It had an 800-square foot footprint, plus a basement and a detached garage, says Elliott; it has now grown to 2,300 square feet. “I traded a lot of rough, detached space for a lot of living space,” he says. The remodel, however, is still a work in progress.

Four years ago, the Elliotts were told it would cost $300,000 to accomplish everything they wanted. They decided instead to spend $150,000 on what Elliott calls “the big, rough stuff”—raising the house, and putting in a new foundation, walls, and utilities. “Basically, we got a shell that we could live in,” he says, “and we’re doing the rest of the work ourselves, piecemeal.” Elliott regrets only one of their initial construction choices: “If we could have invested another $20,000, we would also have gotten the insulation and sheetrock done, which would have made the whole project much more manageable for us.”

Overall, however, the Elliotts are happy with their decisions. “We had bought one of the cheaper houses in the neighborhood, and had a lot of equity in it,” says Mark. “It was 1993, and since then prices have just gone up and up. It was a small house on a large lot, so expanding wasn’t difficult.”

Mark and Cynthia aren’t afraid of hard work, even if it has to be done nights and weekends. But their best-laid plans didn’t figure on a cute arrival named Lucas. “We had been trying to have a child for a few years and we had been preparing to work on the house for a few years,” says Mark. “We thought we would do them in tandem, and we wound up doing them together.” When Lucas was born in May 2003, the remodeling came to a dead stopænoise and plaster dust don’t mix with nap time and juice. Lucas may be the apple of his father’s eye, but Mark has a clear sense of priorities: “Do your remodel before you have a kid,” he says.

The Elliotts plan to live in the house for a long time, and they made choices that a seller (or an architect or contractor) might not. “People told us to stick to the straight and narrow—do it simple and cheap,” says Mark. “But I wasn’t interested in that. I’m a designer and I was my own client, so I could experiment. That’s personally gratifying, and the result is a house that’s uniquely my own.”

William Rodarmor is a writer, editor, and French translator in Berkeley, California.

Need help with remodeling decisions? Feel free to call us at Berkeley Hills Realty, 510-524-9888. We’ll be happy to share our opinions and wisdom on your remodeling project.

 

Every December, Realtor magazine publishes a roundup of the return anticipated on certain remodels in some 60 markets, including San Francisco (but not the East Bay). The figures excerpted below are from the seventh annual “Cost vs. Value Report” in the magazine’s December 2004 issue. For the full report, go to www.remodeling.hw.net.

Warning: These are only estimates, albeit informed ones. Actual remodeling costs and returns can vary enormously.

Home prices have steadily risen over the last year, and houses are selling more quickly than ever. Says Nancy Mueller, co-owner of Berkeley Hills Realty: “Bidding is very competitive, because of low interest rates, lack of inventory, and pent-up demand.”