Tips on Getting The Best Return on Home Improvements
The truth is that most home improvements don't increase the value of your house as much as they cost. The following is a list of the improvements with the highest return on investment.
1. Clean / de-clutter - 973% Average Return on Investment: Remove clutter by storing items in basement, attic or friend's home. Rent a storage space or sell excess items, if needed. Keep every room very clean during open homes. Do pre-open house cleanliness inspections.
2. Lighten and brighten - 865% Average Return on Investment: Replace any burnt-out bulbs and use higher wattage bulbs, if possible. Have defective electrical components repaired or replaced. Make sure skylights are clear and keep drapes open during the day.
3. Yard - 426% Average Return on Investment: Store away personal effects from front yard. Hire gardener or landscaper to trim back the overgrowth and maintain yard. Make sure that your lawn has a healthy green appearance.
4. Plumbing and electrical - 260% Average Return on Investment: Consider repairing or replacing any defective plumbing or electrical items in your home. Make sure you have the right person for the job by getting several estimates.
5. Staging - 251% Average Return on Investment: Buy some fresh flowers, live plants and other decorations to liven up the home. Dispose of old furniture or other large items. Consider renting furniture or hiring a staging consultant.
6. Update kitchen and bath - 168% Average Return on Investment: Update kitchen and baths by resurfacing cabinets or painting with neutral color. Replace toilet seats, dated fixtures and drawer/cabinet handles. Freshly caulk and redo grout in countertops, sinks, tubs and showers. This is much less extensive than a kitchen or bath remodel and generally has a greater return.
7. Paint interior - 148% Average Return on Investment: Repair any damaged interior walls by patching all chips, holes and cracks; then touch up or repaint interior walls with neutral color.
8. Carpeting = 104% Average Return on Investment: If carpets are only lightly soiled, shampooing and/or spot removal should suffice. If there are rips, fading, heavy wear, smells or deep stains, replace with neutral color.
9. Flooring - 101% Average Return on Investment: Repair and refinish damaged floors, or cover with neutral-colored wall to wall carpet and note damage in your disclosure.
10. Paint exterior - 76% Average Return on Investment: Repaint or resurface the outside walls of house, as needed. Patch and repair any damaged areas.
If you re thinking about remodeling your kitchen, or finishing your basement, you probably want to get your investment back when you sell your home. But when it comes to payback value of home improvements, some are definitely more profitable than others. As a general rule, kitchen and bathroom projects usually get a nice return on investment, typically 90% or more. Things like adding rooms or finishing basements tend to pay back the least. Finishing a basement usually returns less than 50%, so it s not a project likely to show profit at selling time.
There are a number of factors that go into determining how well a project will pay back. Payback value depends a lot on the current market conditions in your neighborhood. If the market is hot and homes are selling fast, you can expect a higher payback value than you would get in a slow market.
The type of project you do and how it fits in with other homes in the area can have a big influence on payback too. If you put your money into the wrong type of improvement, you won t get your money back. But if you're smart about what you do, you can add value to your home which will make marketing it in the future even easier. The payback will be better on improvements that are in demand and conform to your neighborhood s standards. Adding a second bathroom in a neighborhood where most homes have two bathrooms will give a high return on investment. Building a large addition that makes your home twice as big as the other homes on the block probably won t pay back very well. Likewise, the popularity of a project will factor into how much it pays back. An improvement heavily customized to your wants and needs won t pay back as well as something more common to other homes in the neighborhood.
Another factor to consider is the cost of the improvements. If you can do the work yourself, you can save significantly on the cost of the project and greatly improve the chances of getting a good return on the investment.
The list below is compiled from several published surveys and shows typical payback for some popular remodeling projects:
- Kitchen remodeling 90%
- Add a bathroom 90%
- Install central heating 90%
- Install central air 75%
- Add a deck 70%
- Replace windows 70%
- Add a room 55%
- Build a pool 45%
- Finish a basement 40%
If you are considering selling your home sometime in the next 24 months, contact us to discuss your improvements and whether they make sense for your needs and how they will impact the marketing of your home.