Using your home’s value to determine a reasonable budget
The 5 to 15% Rule
The 5 to 15% rule is a guideline that is widely accepted within the remodeling and building industries and can help you get a sense of what is reasonable to spend given the value of your home.
The 5-15% rule states that the entire kitchen project should cost no less than 5% and no more than 15% of the current value of your home. The national average is 8%.
The basis of the rule is that if you spend less than 5%, there is a good chance you may be devaluing your home. If you spend more than 15%, there is a good chance you are overspending, and will not recoup your investment at a reasonable rate.
Things to consider in determining the percentage that works for you
Your evaluation of how much you spend should take into account the prominence of your kitchen within your home (the more prominent it is, the more impact it has on the value of your home), how much time you and your family spend in the kitchen and of course, how much you can afford. Up to a point, the higher quality home you live in, the higher a potential buyer’s expectation will be regarding the condition of the kitchen and the bigger the impact it will play in the appeal of the home.
The National Kitchen Bath Association conducted a recent survey in which they found that on average,homeowners using professional services (this is not a DIY budget) allocated their budget as follows:
Lighting and electrical 5%
Walls and Trim 3%