How to Increase Your Home's Value
We want to sell our home, but I think our home needs some work so we can get the most money back from the sale!
Has this thought ever crossed your mind when wondering if your home is ready to sell? Trying to figure out which home improvement projects should be done to best increase the value of a home can be tricky. There are many factors involved and so many mistakes that can be made!
There are ways to increase your home’s value for resale that range from the very expensive (major remodels and additions) to free (tidying up the front yard). We’ll look at the whole range, noting how much value is added when possible. We’ll also take into consideration the other factor that can be affected with home improvements: your tax bill.
Before you begin any minor or major projects, it is important that you do them with the following in mind: you do not want to raise the value of your property too far above others in the neighborhood. Why? Because people who want expensive homes will shop exclusively in higher-value neighborhoods. If you own the “best house” in the neighborhood, it is unlikely you will recoup whatever investment you’ve made. A good rule of thumb: keep the value of your property within 15 to 20 percent of your neighbors’.
A second big deciding factor on which projects to take on is the effect they may have on your tax bill. You may think that deliberately increasing your home’s value will increase your property taxes as well, but that’s not always the case.
Qualifying improvements that may reduce your tax bill are those that increase your home’s value or prolong your home’s life. These projects include a fence, driveway, a new room, addition, swimming pool, garage, porch or deck, built-in appliances, insulation, new heating/cooling systems, a new roof, and landscaping.
The following list ranks the top fifteen remodeling projects (as of April 2020) undertaken to increase a home’s value in the United States and what percentage of your remodeling investment is recouped at resale.
Project (average cost recouped, national):
1. Minor Bathroom Remodel (102%)
2. Landscaping (100%)
3. Minor Kitchen Remodel (98.5%)
4. Exterior Improvements (95.5%)
5. Attic Bedroom Conversion (93.5%)
6. Major Bathroom Remodel (93.2%)
7. Major Kitchen Remodel (91%)
8. Deck, Patio or Porch Addition (90.3%)
9. Basement Remodel (90.1%)
10. Replacement Windows (89.6%)
11. Family Room Addition (83%)
12. Bonus Room Updates (72.8%)
13. Living Room Updates – Décor (66%)
14. Bedroom Updates (52%)
15. Living Room Updates – Walls and Floors (40%)
These are national averages, so in your area, the figures may be lower or higher. To explain, if you spend $10,000 on a minor kitchen remodel, you will be adding $9,850 to the value of your house. Remember that trying to add value to your home is a tricky business. What seems to add value to you may not appear that way to any given prospective buyer.
Projects that may increase your home’s value include: Jacuzzi (4 jets or more); permanent hot tub; in-ground pool with nice deck area; security system; sprinkler system; substantial out buildings such as two-car garage or finished workshop; and vaulted or trey ceilings. Think twice about the following projects however, as they may not add value to your house: above-ground pool; ceiling fans; garden pool; and light fixtures.
Some tips when attempting value-increasing remodeling:
l Remodel with mass appeal in mind. Potential buyers are usually attracted more to neutral, mainstream design.
l Don’t go cheap when it comes to construction. Use durable, quality materials. If you’re a do-it-yourselfer, honestly evaluate your ability to do it right.
l Don’t remodel in a different style from the rest of the house. Additions and improvements that look “tacked on” may detract from a home’s appeal.
l Turning a bedroom into a bathroom is a mistake – it reduces the number of bedrooms, a chief selling point.
l Don’t do a $30,000 kitchen remodel in a $100,000 house – unless you plan to continue living there. It is a waste of money.
If you don’t have the kind of money it takes for even minor remodeling, there are low-cost ways to increase your home’s value. At the very least, the following things will make your home more attractive and inviting to prospective buyers.
Make sure the outside of your home is spic-and-span. Clean out the gutters. Wash the windows and remove cobwebs and bugs. Trim the hedges, cut and edge the lawn, sweep the sidewalks and driveway. Plant some colorful flowers out front. The reason for these small things is simple: If two similar homes in the same are area are both for sale, the one with the cleanest and most appealing front yard will sell first.
You may want to add to or improve your landscaping while you’re at it. According to a study conducted by Money Magazine, landscaping may be the best investment to improve a home's value. The study found that well-planned, attractive landscaping was estimated to have an actual recovery rate 100 to 200 percent higher than a kitchen or bathroom renovation.
Now you hopefully have a better understanding of how to best tackle home improvement projects to better increase the value of your home. Remember, we are in a seller's market and the ball is in your court! Don't stress too much over home renovation projects. Pick two or three projects ranging from small to large and focus on just those projects to tackle. Your next and most important step is to have your local realtor over for a listing appointment where you can begin the planning stages of selling your home. The right marketing will help you really get the most return from the sale!