ROI is tricky business and recouping costs on renovations is rarely a guarantee. Invest too little and you lose money. Invest too much and you waste money.
At a minimum, the National Association of Realtors (NAR) suggests you should be saving at least 1% of your home’s current value each year to put back into maintenance and upkeep projects. Appraisers take note of neglect, and they’ll dock your home value for things like damaged roof tiles, driveway cracks, or dysfunctional appliances that you may have prolonged fixing.
On the other end of the spectrum, if you spend big bucks on fancy floors and custom projects that catapult your expenses above what your home is worth, you’re in trouble. It takes some TLC in the form of home maintenance and some smart renovations to increase your home value, but not every project you see in the home decor glossies is worth it, no matter how pretty it looks.
So how do you tow the line as you gear up to sell your house?
These 5 tips to increase home value will help guide your answers to questions like “Is a bathroom model going to help me?” or “Is it worth it to fix that creaky floor?” You have to invest money to make money, but you don’t have to design a luxury home to increase its value. Stick to these guidelines as you weigh your options.
1. Refresh, don’t replace.
If kitchen cabinets have some wear and tear, don’t rip them out.
“We can salvage the cabinets by painting them,” says Anthony Navarro, a real estate agent ranked in the top 1% of agents in San Francisco. One of his specialties is piecing together crews, from handymen and contractors, to help sellers fix their homes up for market at an affordable price.
Updating hardware can also make kitchen cabinets and drawers look more modern. If the sinks or tubs look old and worn, deep clean them by sprinkling with baking soda and then spray with a vinegar and water solution. (Caveat: Do some research depending on what your tub is made out of. Enamel tubs can be a bit sensitive.)
Give rooms a fresh coat of paint, clean grout, polish wood floors, and see if that doesn’t drastically improve the look of key rooms before you spring for major renovations and replacements.
Then, proceed with caution. Keep all additional projects minimal and fight the urge to do a total overhaul. According to Remodeling magazine’s 2019 Cost vs. Value Report, big-ticket renovations tend to have a lower return rate than a more modest project. A minor kitchen remodel gleaned almost 20% more return than mid-range and upscale kitchen remodels, and even a minor remodel didn’t stack up to the ROI of some lesser-talked about projects.
For example, adding a new garage door and replacing old siding with stone veneer both had the highest average ROI for 2019. They’re the only two projects that recouped more than 90% of costs and they were also two of the lowest-priced projects (the only more affordable project was adding a steel front door which recouped 74% of the cost on average)
2. Choose functional materials to attract young buyers.
Low-maintenance is sexy, especially to millennials who are now the largest generation of homebuyers. They want easy-peasy homes with minimal upkeep required and no major repairs looming in the near future.
They’ve put off buying a home due to student loan debt, so they’re less likely to have extra money to sink into repairs and renovations. According to NAR’s report on generational trends, 51% of millennials bought a new-built home to avoid just that
However, millennials were also more likely than other generations to buy a preowned home to get a better price, more value, or simply to have a home with more charm. Translation: Give your preowned home a simple facelift with updated fixtures and features and you may have them at hello.
Anything from old appliances, aged carpet, or a leaky roof may be a deal-breaker for this generation because they want turnkey liveable spaces that are efficient and in good condition.
Depending on your budget and the current local market, smart updates that can increase home value might include
Everyone wins with hardwood. While it does require some extra polishing compared to tile (OK, so there’s a little maintenance involved), NAR found that 57% of buyers are willing to pay more for hardwood floors. And carpet may be cheaper than both tile and hardwood, but hardwood is more durable and adds more resale value. It goes the distance, and that’s what homebuyers want—especially millennials. It could be just the makeover your older home needs to attract a younger buyer.
According to the National Association of Home Builders, millennials pay 2%-3% more for a home that’s energy-efficient. That includes new energy-efficient appliances (one study found that 75% of millennials look for this) and newer A/C units and windows. According to Energy Star, Miele brand dishwashers are the most energy-efficient and AirEase rank best for AC units. If you have old appliances that may cause a red flag during an inspection, review Energy Star’s full report on the most energy-efficient option before you head to the department store
If your roof is in good condition and won’t raise a flag during the appraisal, ignore this. However, if it’s going to be an issue, consider replacing it, and choose mid-range durable materials.
According to HomeAdvisor, a metal roof is more expensive than asphalt but more affordable than slate or polymer shingles. And spending a little more may attract the right buyer. PacificWest Roofing in Oregon says a metal roof can last up to 30 years longer, and it’s energy-efficient. Hello, selling point!
Not convinced you should replace it? Discuss it with your agent based on the current market. The ROI on a new roof might be anywhere from 67% to 69%, so you won’t recoup dollar for dollar.
However, a shotty roof may also cause your house to sit on the market too long and deter interested buyers after the inspection period (especially young buyers who can’t afford a new roof on top of their down payment). The longer your house sits on the market, the less likely you are to receive the full asking price.
3. Focus on the money rooms when they need attention.
Historically, kitchens and bathrooms are the rooms buyers zero in on. NAR’s most recent Remodeling Impact Report ranked both kitchen and bathroom remodels in the top three projects that are most appealing to buyers as well as most likely to increase home value. That said, the ROI on these projects isn’t what it used to be.
Back in 2004, a minor kitchen remodel recouped an average of 92% of costs while a midrange bathroom remodel recouped 90% of costs. In 2019, those numbers have dropped to 80% and 67% respectively. But that doesn’t mean these rooms never benefit from updates.
Navarro recalls one property where he advised a minor kitchen remodel that involved adding new countertops, floors, a backsplash, and painting the cabinets. He was able to do it under $15,000. “We received five offers and went way over the asking price,” he says. “It significantly enhanced the property. We would not have received those offers if we didn’t do those updates.”
Your budget and your current local market play into these decisions. For example, if you live in an area where space is limited and your home only has one bathroom, but you have the means and the ability to add a second bathroom, it’s a safe bet that it’ll pay off.
“I know in other markets that’s not necessarily true,” says Navarro. “But in our market where square footage and amenities are not in abundance, it would absolutely pay off because it’s one less thing for a buyer to have to invest in after the close of escrow.
4. Curb appeal is your low-hanging fruit.
Ah, curb appeal. Everyone’s favorite home upgrade hack.
“It doesn’t have to be perfect,” says Navarro. One of his clients added grass, stepping stones, and some plants, and that alone garnered positive feedback from buyers. And according to Homelight’s Top Agent Insights Report for Q1 2019, 90% of agents agree with Navarro, saying curb appeal is something all sellers should tackle before listing their home.
Need more motivation to break out your rake? A study by the department of horticulture at Michigan State University found that landscaping can add anywhere from 5% to 11% resale value. Other data suggests that it can help sell a home up to six weeks faster. More recently, the HomeLight’s Q2 2019 Top Agent Insights Report report found that a standard lawn care service with fertilizer and weed control had a 352% ROI. It’s a no brainer.
Other curb appeal projects to try:
- Paint your front door and home’s exterior.
Exterior paint has an average ROI of 90%. Stick to neutral colors, and if you want to add bold color, keep it to the front door only.
- Power wash your exterior.
You can rent one for less than $100 per day and it may increase home value by $10,000 to $15,000. Cha-ching
- Plant mature trees.
They provide shade and they look pretty. But even better, according to the Council of Tree and Landscape Appraisers, they can add anywhere from $1,000 to $10,000 to your home value.
5. Fix what’s broken if you can afford it.
Now for the great debate: What’s truly worth repairing before you list your home? Big-ticket items like HVAC systems and new roofing can cost a pretty penny. According to one heating and cooling company, a new HVAC system might only recoup 50% of its costs or less.
However, scary issues like water damage and an ancient HVAC unit will come up on the inspection and give buyers bartering power. Ask yourself (and your agent): Even if I don’t recoup the full cost of a new unit, do I lose more money when the buyers ask me to shave the entire cost of a new unit off the list price?
The same concept applies to issues like a damaged roof. Notable damage may cause your house to sit on the market longer. A good agent will be able to guide you through this decision by comparing it to other homes sold in the area
Navarro does caution not to paint a broad stroke over the issue. It depends on your financial capabilities. “I have sold properties that had significant damage and I didn’t recommend them to [repair] it,” he says. If you don’t have the funds, you don’t have the funds.
Bottom line is that increasing your home value doesn’t require major renovations. Based on what you can afford, fix what’s broken first, and then consider the minor upgrades before embarking on a room overhaul.
Upgrade the floors, add a fresh coat of paint, and then clean and stage the home. But always weigh the options with a top local agent sitting on extensive experience in your area. If there’s one consistent factor in homeownership, it’s that what increases home value in one city may be night-and-day different in another.