Which home improvement projects bring the most value?
A question I receive often is ‘what home improvement projects should I do to maximize the value of my home?’
Browsing the internet will produce all kinds of lists and recommendations, but what is important to understand is that not everyone’s home will benefit from the same renovations. If you want to skip ahead to my list of projects click here.
I approach the question a bit differently because my recommendation changes with each client depending on various factors. Before you jump into that project list, please take a moment to consider the following:
What is your property’s value in the current market?
The average inflation rate is not set in stone as many economic factors will impact the increase. However, if you make zero updates and properly maintain the property, it will gradually increase in value.
You can also help the value with updates. If you want to be sure you are investing in home improvement projects that will help your value, you must first know what the current value is!
Understanding the current market value of your property is something every homeowner should follow regularly. It is also the first step you should take before jumping into any major project.
Reach out to your Real Estate consultant and request a Comparative Market Analysis (CMA) for your home.
How much Equity do you have in your property?
Now that you know the current value, you need to determine how much equity you have.
Equity is the value of the home - the mortgage payoff amount.
As an example: Ms. Homeowner owes $100,000 on her mortgage. The current market value of her home is $200,000. $200,000 - $100,000 = $100,000 of equity in the home. So if Ms. Homeowner sold her home, she would walk away with a profit of $100,000 - Closing costs.
This is an important number to know when considering home improvement projects so you can be sure you are not OVER investing.
If you are interested in using your equity to FUND YOUR HOME IMPROVEMENT PROJECTS, ask me about the Compass Concierge Program!
What are the current market conditions?
Is it a Sellers market? Or is it a Buyers market?
This is the concept of supply and demand. If your area is experiencing low housing inventory and a high demand of buyers searching, then it would be considered a Sellers market.
You always want to present your home in it’s best light to maximize your profit, but you may not need to invest as much when the demand is high.
On the other side, a Buyers Market is when there are plenty of homes for sale, but fewer buyers. This means sellers will need to compete with the other properties on the market. In this market, some of those ‘wow factor’ projects can prove worth the investment.
How does your property compare to similar homes that have sold in your neighborhood?
Just because your neighbor sold their property for $500,000 does not automatically mean someone would pay the same for yours!
Take a look at the listing photos and note how similar homes compare to yours. Look at the level of updates, curb appeal, number of bathrooms… Use the comparable sales as your first point of research to determine which projects you may need to tackle in order to obtain a similar price.
Your real estate agent can also help you with this, so never hesitate to reach out and schedule a consultation!
Current Home Trends attracting Buyers!
After you have a strong understanding of your home’s value, your potential net proceeds, and what the current market trends are in your neighborhood… NOW we can explore which projects may bring you the best return on investment.
My recommendations vary for every client, so please reach out if you would like to schedule a home consultation. There are some consistent features that I find to be appealing to current Buyers, which are listed below.
1. Floors - Refinishing hardwood floors OR installing new, quality flooring in the main living areas may be one of the best investments you can make.
Many of today’s buyers want hardwood flooring. Note that they may balk at some of the lower quality laminate options out there, so I do recommend selecting something that looks and feels more substantial and stable.
2. Kitchen - If a full renovation is not in the budget, there are smaller updates you can address to give your kitchen a fresh look. Some ideas: purchase new appliances; install new countertops; install more modern lighting fixtures; swap cabinet and drawer pulls.
3. Garage Door - This may surprise some, but a well maintained garage door makes a huge difference to the curb appeal.
On the contrary, a garage door in poor condition may give a buyer a bad first impression and have them questioning how well the rest of the home as been maintained.
4. Converting Attic/Basement into additional living space - Adding useable living space has always been a worthwhile investment, but this project has proven even more exciting to buyers in recent years.
The pandemic shifted many people’s lives. We have since found more and more buyers in need of additional space. Finished attics and basements are very appealing!
5. Bathroom upgrade - Similar to the kitchen, if you are not in the position to gut and fully renovate a bathroom, you may want to consider some smaller updates.
Some ideas: Fresh paint (be sure to use mildew resistant paint with a glossy finish); Update lighting fixtures; Consider a vanity replacement; Purchase a new shower curtain and bath mat.
6. Paint - A freshly painted home goes a very long way! The house will both look and smell fresh. If you are preparing for sale, do not choose any bold colors. Go with lighter neutrals/white to be able to appeal to more.
7. Home Office - This is a newer add when I talk to Sellers! MANY buyers now need a designated home office space. Since the pandemic, this is a common ‘must have’ that my buyer client’s are giving me. Staging a designated office space will help buyers visualize how the home will function for their lifestyle. This space can be in a finished attic/basement/extra bedroom.
Are you considering a small addition to your home to build out an office space? This is an investment that will likely prove worthwhile as the world of work from home/hybrid schedules appear to be here for awhile!
8. Home Systems - I am adding this here because I want to remind everyone that it is never a bad investment to make sure your systems and roof are all functioning properly. It may not be a fun way to spend money, but a leaking roof or scary electrical systems can kill a deal. Hooking the buyer and getting that offer is step one, but you want them to be just as excited and comfortable after their inspection!
Don’t forget the Value of Your Happiness!
My focus is obviously with improvements when considering the resale of a property, but remember that there is always value in improving your personal lifestyle and happiness! Don’t be so quick to shy away from projects that may not necessarily bump your property value. If certain updates would improve your daily comforts and lifestyle (and wouldn’t depreciate the home), then go for it!
If you would like to discuss further or if you are interested in a home consultation, email Emily Woods: emily.woods@veryre.com.