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A home is more than just a place where you rest your head at night. For homeowners, it’s also a significant investment. Homeownership is one of the best ways for anyone to grow their wealth by building home equity.
But while home values tend to appreciate over time in most markets, it’s impossible to predict how macroeconomic or personal factors might impact the market. Maybe you’re not ready to sell when the market is at its peak for sellers. Maybe a sluggish market makes you reconsider selling your home.
You can’t control every factor that goes into your home’s value. You can, however, make certain changes to increase your home’s value beyond standard appreciation. From small finishing touches to major additions, there are many ways to increase the value of your home. In this piece, we outline some of the best options.
Small touches to increase your home value
Before we jump into things you can do to increase your home value, it’s important to note that most investments will not recoup 100% of their cost. But you’re not just spending money to spend money. A remodel or renovation may not always generate a positive return on investment, but they may reverse a negative buying incentive.
For example, a broken garage door may turn someone off from buying your home. Not only does it look ugly, but it’s something the new owner will have to pay to fix. In that sense, paying to fix it now reverses the negative buying incentive, removes one thing that the new owners might have to pay for, and beautifies your home in a way that raises a home appraisal.
That said, small touches is a relative phrase. In terms of home improvements, we consider any investment under $15,000 a “small touch.” Many of these improvements can recoup a large percentage of their cost when you sell the house.
1. Replace the garage door
You may be surprised to learn that the number one most cost-efficient project according to Remodeling.net is a garage door replacement. Upgrading your garage door with new paint and thermal insulation costs an average of $3,907 but generates an average resale value of $3,663, recouping 93.8% of the cost.
2. Manufactured stone veneer
The second most cost-efficient project according to Remodeling.net is another oddly specific one. Removing vinyl siding and replacing it with an adhered manufactured stone veneer recoups 92.1% of the cost. It won’t work on every house, but the $10,000 project generates an average of $9,571 in resale value.
3. Add curb appeal
The manufactured stone veneer ties in with the larger theme of adding curb appeal, we just broke it out as its own point due its specificity.
Real estate agents often talk about curb appeal because first impressions may have a big impact on the sales value of your home, especially in a seller’s market. After all, the first thing a buyer sees is the outside of the house. If it looks a little worn, that first impression might stick with a buyer throughout a viewing and motivate them to make a lower offer. If the house looks amazing, buyers may feel the pressure to offer more to beat out other potential buyers. It can also increase the value to home appraisers.
Adding curb appeal doesn’t have to be as expensive as a manufactured stone veneer. Simple touches like maintaining the existing landscape go a long way. Keep the lawn mowed, the hedges trimmed, and remove any weeds growing around the house. You could take it up a notch by planting flowers or painting the front door.
If your home hasn’t been painted in a while, you should invest in a paint job, but you don’t have to hire professionals. If you have the time, a DIY paint job on your house is much less expensive and can have the same positive impact.
4. Improving finishes
Simple changes like switching from brass doorknobs and locks to brushed nickel or swapping out yellow incandescent bulbs for bright LED lights can make an impression on buyers. Making small finishing touches on faucets, knobs, and other fixtures around your home are low cost upgrades that can increase the value of your home to buyers.
5. Make it smarter
A 2018 survey by Coldwell Banker found that not only do most buyers want smart technology in their home, but safety-enhancing gadgets top the wish list. As such, installing smart safety devices like thermostats, fire detectors, carbon monoxide detectors, security cameras, door locks, and lighting will catch the attention of tech-savvy buyers. You can usually install these devices yourself for less than $1,000.
6. Invest in energy efficiency
Just as homebuyers want smarter homes, they also want more eco-friendly ones. Energy efficient homes not only help the environment, but they cut down on utility bills too.
There are many eco-conscious upgrades you can make to your home on a budget. You could install a smart thermostat that improves your home’s energy efficiency, replace old appliances with newer, more efficient ones, install double-pane windows, or go as far as adding solar panels on the roof. In 2019, 36% of realtors said that solar panels increased the perceived property value of a home.
If you want to make energy upgrades, schedule an assessment with a certified energy auditor or your local utility company. They can help you determine where your home is wasting energy and which upgrades will save you the most money and increase your home value the most.
Big additions to increase your home value
While small touches may give your home value a small boost or make it more desirable in a competitive housing market, big additions could have a major impact on your eventual sale price.
1. Room remodeling and staging
One of the best investments you can make in your home is a thoughtful remodel, or paying for professional home staging. Professional home stagers will spruce up each room in your home with furniture, plants, and other thoughtful touches to make your home look more desirable to buyers. In 2021, 23% of real estate agents said staging a home increased buyer offers by 1-5%, 15% said it increased offers by 6-10%, and another 9% said it increased offers from 11-20%. Only 26% said it led to no dollar amount change.
Staging itself isn’t prohibitively expensive. The average cost for most home stagers is somewhere between $1,000 and $3,000 nationwide.
That said, home staging can only go so far if your home is out of date or in poor condition. A minor kitchen or bathroom remodel are some of the best big additions you can make to increase your home value. A kitchen remodel typically recoups about 98.5% of your initial investment while a bathroom remodel typically generates 102% ROI, according to Orchard’s analysis.
(Keep in mind that Orchard’s Concierge service makes repairs and updates to homes before they list on the market, without any upfront costs to the homeowner.)
2. Add more space
The national median price per square foot is $185. It’s not a perfect measurement, but it tends to be the case that the greater your home’s square footage, the more it will sell for. Adding square footage, in the form of a finished basement (in some markets) or an additional bedroom can add significant value to your home. It may not be exactly $185 per square foot but it will be meaningful.
You also don’t have to add anything. Look around your home. Could you knock down a wall to open up space to make your home feel bigger? Could you adapt a large broom closet into a bathroom?
It doesn’t have to be inside the house, either. Adding a deck outside may cost more than $16,000 but sellers recoup an average of $11,000 (66%) during a sale.
Major home additions almost always cost you more than the resale value, which is why it’s smart to make an addition well before selling so you can actually enjoy it before selling the home. Between the addition itself, the equity you gain over time, and the general tendency for home values to grow, the investment will pay dividends when you decide to sell years down the road.
How to calculate if a change is worth it
Calculating if it’s worth making an investment in your home depends on your timeline and your appetite for risk. If you know you want to move, recognize that your market is hot, and think you can complete a bathroom remodel before the market cools down, it may be worth the $25,000 investment. Likewise, if you plan to be in your home for a while, making a major change now when you’ll have time to enjoy it is smart. On the other hand, paying $45,000 on a new kitchen just so you can try to sell your home faster may not be the best idea.
You can also use this valuable resource at Remodeling.net, which gauges the 22 most cost-effective home improvements annually.
How to pay for home improvements
The final, and perhaps most important question when it comes to increasing the value of your home is how are you going to pay for it? Major home investments rarely recoup 100% of their cost, but they can make you more comfortable, add value to your home, and might help you sell faster.
If you can pay for home improvements in cash, that’s great. That will allow you to keep your finances flexible while searching for a new home and covering all of the additional costs that come with moving. If you can’t, these are some of the best options:
- Credit card: As long as you pay off the entire balance within a couple of statement periods, it’s fine to put major home renovations on a credit card.
- Home equity loan or home equity line of credit (HELOC): Turn your home’s equity into easily accessible funds by taking out a second mortgage. Home equity loans pay out a lump sum of cash while HELOCs are a line of financing that you can borrow against over time. Both have interest rates, fees, monthly payments, and tax advantages that vary from lender to lender.
- Personal loan: If you don’t have the home equity for a second mortgage, a personal loan may fit the bill. It will have a higher interest rate than home equity financing but it’s most likely better than a credit card if you can’t pay the balance back fast.
- Cash-out refinance: If a second mortgage isn’t for you, you can use your home equity to refinance your mortgage and get some cash upfront. However, cash-out mortgage rates may be higher than your existing rate and this option only makes sense if you have significant equity in your home.
- Services like Concierge: As mentioned above, some companies like Orchard can help you make changes to your home just ahead of the sale that add value.
Remember, don’t go overboard with your improvements just in the name of recouping more value. Sometimes, a simple bucket of paint or a pressure washer rental can go a long way.