As you prepare to sell your home, you might be researching cost-effective projects and home improvements that can fetch you a higher sale price. It seems like everyone—from your next door neighbor to home-makeover TV shows—has advice.
You’ve heard that it’s all about kitchens and bathrooms, but how do you know if the work will pay off? Will updating your kitchen countertops and appliances actually lead to a return on investment?
We’ll discuss guiding insights you can use to decide whether or not that next home improvement project is worth it – and share 10 tips to increase your home’s value.
One of the biggest sources of confusion around home value comes down to a misunderstanding of the difference between basic maintenance and upgrades. Maintenance is the time and money you spend fixing, replacing, or keeping essential items in your home in working order.
For example, changing your HVAC filter, repairing broken roof shingles, and fixing leaky faucets all count as home maintenance. These activities don’t increase your home’s value, but maintain it.
On the other hand, upgrades are renovations that improve the condition of your home and increases its value. For example replacing formica with granite countertops would be considered an upgrade that increases the value of your home at resale.
Homeowners often confuse maintenance projects for upgrades because they can be expensive. It’s natural to assume that because you spent a lot of money replacing your aging roof or broken air conditioner that it adds to your home value, but unfortunately, what it’s really doing is keeping your home from dropping below market value.
You can think of it like fixing a broken window on a car—replacing that window doesn’t increase your car’s resale value, but not replacing it would definitely decrease the car’s value.
It’s the same with home maintenance. If your home was worth $200,000 in perfect shape and you spent $5,000 replacing a broken roof, your home is still worth $200,000. If you hadn’t fixed the roof, it’s market value would have dropped to $195,000 or lower, because any buyer would discount the cost of that repair from the purchase price.
This brings us to an important point—if you’re looking to maximize your home sale profit, investing in maintenance can be more important than investing in upgrades. Buyers won’t be interested in the fact that your home has marble tile flooring if it has leaky plumbing.
In fact, many lenders won’t even give out a loan on a home that has issues with its major systems like plumbing, heating, or electrical. So use that home improvement budget to make sure the bases are covered before splurging on the latest hot home trend.
Tip 1: Get a home inspection before listing.
It costs about $200-500, but will save you time, money, and headache later. If you wait until the buyer’s inspection and a major repair ask is discovered, you may lose a large percentage of the sale price.
Tip 2: Do annual maintenance.
Like going to your doctor, preventative care is key to keeping up your home’s value. Use a home maintenance checklist and schedule time to do the work. Simple tasks like changing your HVAC filter can extend its life and is a lot cheaper than having to replace it.
If you’re selling your home on the market, the impact of curb appeal, staging, and decluttering can’t be understated. Although these things don’t increase your home’s inherent value (i.e. they won’t impact an appraisal or tax assessment), they do increase your home’s value in the mind of potential buyers.
Also, cosmetic improvements can be extremely cost-effective. While it’s difficult and expensive to invest in renovations that will increase your home’s objective value like converting a basement or adding a bedroom, there are a lot of simple things you can do to improve appearance.
After living in a home for a long time, it can be hard to view it objectively, but try your best to get in the mindset of a buyer who is seeing it for the first time. Evaluate your home room-by-room to determine what work needs to be done.
Don’t forget to scrutinize the outside of your home as well—remember, your home’s curb appeal (or how it looks from the street) makes the real first impression. If a buyer arrives at your home and sees peeling siding or an overgrown lawn, they may decide it’s not even worth going inside. Then it won’t matter how thoroughly you scrubbed or beautifully you staged the inside.
Tip 3: Invest in Curb Appeal.
Simple projects like power washing the outside of your home, planting fresh flowers, and painting your front door add a lot of sparkle and can be done in a weekend.
Tip 4: Deep clean and declutter.
Scrub away stains and clear out the majority of your belongings to make space for staging your home. Check out the next chapter for detailed instructions on how to get (and keep) your home show-ready.
Many homeowners mistakenly believe they’ll get more than the amount they invested in renovations back when they sell their home. Unfortunately, the truth is most upgrades start depreciating the moment they’re finished.
A 2017 study by remodeling.com shows that on average, renovations only give you back 64 cents for every dollar you spend. So even though you may think remodeling your kitchen will pay back a premium, the truth is it may help your home sell faster, but you’re unlikely to recoup the full cost of the work.
That doesn’t mean all renovations are bad and you shouldn’t do them. First, ask yourself why you’re renovating: is it so you can enjoy that new kitchen island or master bath for a few years, or are you solely doing it to boost your home’s sale price? If the renovation is for your enjoyment, great! You get to enjoy the upgrade and when you sell, it should add value to your list price. If it’s solely to increase your home value, don’t do it—you’ll usually lose money.
If you’re aiming to sell your house in the next few months, the trick is to think small. Don’t waste time on large, expensive remodeling projects that won’t yield a return. Instead, focus on minor updates that have an outsized impact on a buyer’s first impression.
For example, the kitchen is one of the most important rooms that “sells the home.” Instead of splurging on a full remodel, update hardware: buy new knobs, hinges and drawer pulls and paint or resurface cabinets.
Tip 5: Research your return on investment.
Before embarking on a large remodeling project, research your expected return on investment so you can make an informed decision.
Tip 6: Look for low-cost but high-impact updates.
Repainting and replacing hardware like hinges, drawer pulls and towel racks can be cost-effective ways to refresh your kitchen and bathrooms.
You may have read or heard somewhere that there are certain trendy upgrades all buyers want—whether it’s stainless steel appliances, shiplap, or granite countertops. The truth is there’s no such thing as a one size fits all upgrade that will guarantee you a faster sale or a higher profit. In fact, if you were to make every upgrade you see on HGTV to your home, there’s a danger you’ll overupdate and decrease your home’s chances of selling.
Instead, when deciding what renovations to invest in, consider what buyers looking for your specific type of home in your specific neighborhood are looking for. Remember, you want to give your home a competitive edge by being above average in your area, but you don’t want your home to be far more upgraded because that means it will also be far more expensive, which limits your buyer pool.
Besides, buyers looking for a home in that higher price range might prefer to live in a neighborhood where most of the homes are in that tier.
The same logic applies to choosing upgrades based on the the kinds of buyers that might want to live in your home. For example, if you own a small starter home, it might not make sense to invest in a 6-burner stove or a fancy marble bath since your prospective buyers will likely be looking for something affordable.
Tip 7: Check out the competition.
Go to open houses in your neighborhood to see if there are any features common to homes in your area that your home doesn’t have.
Tip 8: Picture your prospective buyer.
Is your home best suited for a young couple? A large family? Whoever it may be, think of updates you can make that would suit your target buyer’s lifestyle.
Our homes are personal places. We spend so much of our time at home that it might seem like a good idea to spend money on customized renovations that suit our interests and tastes.
For example, if your family loves movies, you might decide to remodel your basement to build a home theater complete with wall insulation and surround sound wiring. You might even expect this renovation to pay back dividends when you sell because it’s a complex remodeling project.
However, investing in custom home improvement projects may end up costing you more than the contractor’s bill when it comes time to sell. Your prospective buyers might not enjoy movies and as a result, they may see your prized home improvement as an expensive demolition project.
If you’re considering a custom remodeling project, remember that what seems like an obvious home improvement to you might look like an expensive removal project to someone with different tastes. Buyers often spend the majority of their savings on the down payment, so they don’t have budget for immediate renovation projects. Most people want a home that’s move in ready, not one that involves more work.
Tip 9: Keep it neutral.
If you’re investing in renovations like new countertops or tile, it’s safest to stick to neutral colors and simple patterns. Anything too bold can deter future buyers.
Tip 10: Avoid expensive custom upgrades.
Unless the home you’re remodeling is your forever home, costly renovation projects that suit particular interests or tastes can narrow your buyer pool when selling.
We hope these insights help as you decide which home improvement projects to invest in for yourself and for your home sale. Remember, regular preventative home maintenance can save you thousands of dollars down the road, so don’t skip spring cleaning!
And, as you consider updating your home before selling, be sure to take into account your neighborhood and the potential buyers of your home.
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