Refinishing or installing hardwood flooring, insulation upgrades, and getting a new roof or garage door rank as the highest return on value home improvements according to a report by the National Association of Realtors.1
A home is most Americans’ greatest asset. While home values tend to appreciate over time, it’s impossible to predict how macroeconomic or personal factors might impact the housing market. You can’t control everything that affects your home’s value, but you can, however, make changes, big and small, to increase your home’s value beyond standard appreciation.
Before you take on a project, though, make sure you understand the return on investment. Few improvements will recoup 100% or more of the costs when you sell your home, but they still may be worth it.
It’s important to note that most investments will not recoup 100% of their cost. Still, that’s no reason to shy away from the project. A remodel or renovation may not always generate a positive return on investment, but it may reverse a negative buying incentive.
For example, a broken garage door can 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.
If you have hardwood floors, refinishing them can net you a return on investment of up to 147% according to the National Association of Realtors 2022 Remodeling Impact Report.1 This home improvement project costs an average of $3 to $8 per square foot, making it an attractive starting point for homeowners interested in increasing their home value.
Installing new hardwood flooring can be more expensive at $6 to $12 per square foot, but can reap a return on investment of as much as 118%. Talk with your real estate agent about the best wood choices for your area before pulling the trigger to make sure that you get the most boost for your buck.
Another cost-efficient project is a garage door replacement, according to Remodeling.net.2 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.
If your house has vinyl siding, replacing it with an adhered manufactured stone veneer recoups 92.1% of the cost.2 It won’t work on every house, but the $10,000 project generates an average of $9,571 in resale value.
Real estate agents often talk about curb appeal because first impressions 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 during a home tour and motivate them to make a lower offer. If the house is in solid condition, 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. Try these simple touches instead:
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.
Simple changes like switching from brass doorknobs and locks to brushed nickel ones, or swapping out yellow incandescent bulbs for bright LED lights can make a good impression. These small finishing touches are low cost upgrades that can have a big impact on buyers.
Here are some features to consider upgrading:
A 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.3 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.
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, but here are a few ideas to get you started:
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. You may even be able to claim a residential energy credit when it comes time to file your taxes.
Installing a new roof isn’t exactly a small touch. It can cost you as little as $6,000 and as much as $13,000, according to Home Advisor, but has an ROI of 100% according to the National Association of Realtors.
Roofs typically have a lifespan of 20 to 30 years. The peace of mind that buyers won’t have to worry about the roof of their new home for that amount of time can be a major selling point.
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 up to 5%, another 15% said it increased offers by 6% to 10%, and another 9% said it increased offers from 11% to20%. Only 26% said it led to no dollar amount change.5
Staging itself isn’t prohibitively expensive. The average cost for most home stagers is somewhere between $1,000 and $3,000 nationwide.
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.
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.)
The average 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 an additional bedroom or a finished basement (in some markets) can add significant value to your home. It may not be exactly $185 per square foot but it will be meaningful.
Adding more space isn’t limited to 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.2
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 you move. 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.
→ Find out how much a house addition costs
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.
Online tools like this one from Remodeling.net are helpful in vetting whether or not a home improvement project will increase your home value, but talking with a real estate agent is the best way to ensure that it does. Your agent will know what types of home improvements make sense for your market, which is the key to getting a return on your investment.
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:
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.
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