The weather is hot and so is the market. Home prices are on the rise faster than they have ever been since 2006 and the interest rates we’re seeing, while on the rise, are still very low.
You’re considering putting your home on the market to catch the wave, but you’re not sure what to do to your home to garner the best offer. Should you put in hardwood floors, granite counter tops, finish unfinished space, paint, etc? And if you did do any of these things, which one is going to get you the biggest return on your investment?
These are all very good questions and we have some pretty good answers for you.
1. Indoor Systems
Before you consider cosmetic and even functional improvements (such as adding additional square footage) to the home, make all needed upgrades, repairs or replacements to the home’s major systems. Major systems include plumbing, heating, electrical and sewer systems, among others.
Buyers want assurance that these basic items are in working order and won’t need to be replaced or repaired in the near future, an issue that will most likely be addressed in the home inspection. Older homes may require updated wiring and plumbing. An old roof should be replaced. Address problems with heating and air-conditioning units.
2. Outdoor Replacement Projects
Replacement projects will give you more added value than remodeling projects, according to Remodeling Magazine. Fortunately for homeowners, these types of projects are also the least expensive and add to the home’s curb appeal. Consider replacing the garage door, siding, the front door and windows. The average return on investment for these projects is almost 72 percent.
3. Attic Bedroom
The number one home improvement project as far as recouping a return on your investment is the addition of an attic bedroom, according to Remodeling Magazine. At a nationwide average cost of a little over $50,000, expect to recoup 72.5 percent of the cost of adding the attic bedroom when you sell the home.
4. Add an Additional Bathroom
Over the past few decades, the kitchen was the average homebuyer’s focal point when choosing a home. In 2011 bathrooms became more important to buyers than kitchens. That said, anadditional bathroom, even a half bathroom, adds significant value to your home, according to the experts at the National Association of Home Builders (NAHB).
A half bath may add up to 10.5 percent to a home’s value, while a full bath can tack on an additional 20 percent. Of course, the amount of additional value you will receive varies according to the home’s other features.
In 2011 bathrooms became more important to home buyers than kitchens.
The price of adding another bathroom to the house varies as well, depending on region. If you live on the West Coast, plan on paying almost $50,000 for a new bathroom, according to Remodeling Magazine. The magazine also states that, at the sale of the home, you’ll recoup almost 67 percent of the cost of the additional bedroom. East Coasters can plan on spending a bit less – around $41,000, but will recoup less as well – 47.7 percent of the cost.
Tip: If you’re on a tight budget and can’t afford a bathroom addition, give the existing bathrooms a facelift. A fresh coat of paint, new fixtures and new flooring will add value and make the home show better.
5. Kitchen Improvements
Kitchens tend to be the heart of a family home so anything you do to improve your kitchen will add value. Again, painting the kitchen should be the first step, whether you plan an entire remodel of the room or just a minor facelift. Vinyl flooring tends to make the room look dated, so consider replacing it with laminate or tile. New cabinetry, kitchen sink fixtures and updated lighting will all add value.
Tip: Folks on a budget can still increase value by sanding and then painting or staining cabinetry and adding new hardware and by purchasing new (matching) appliances and new countertops.
6. Boost Curb Appeal
When a TV show can be built around this one subject, it’s a pretty good indication of its importance. Curb appeal is what beckons potential buyers into your home and underestimating its importance to the value of a home is a big mistake many homeowners make.
If you have a healthy budget, and your landscaping needs extensive work, consider hiring professionals for this home improvement project. A landscape architect can be pricey but necessary if your yard is in desperate need of an overhaul. According to Jeff Mitchell with the American Society of Landscape Architects (ASLA), curb appeal shouldn’t stop at the front yard, but should be extended to the backyard as well.
At the very least, clean the yard of any debris, trim trees and shrubs and spread fresh mulch in the planting beds. A poorly maintained front yard can result in up to a 10 percent drop in value, according to Houston appraiser Frank Lucco.
Budget curb-appeal improving landscape projects include:
- Line the walkway with solar-powered lights. The big home improvement stores carry a variety of inexpensive styles and all you need to do is stick them in the ground. Not only are they functional – lighting your way at night – but they provide ornamentation as well.
- Green up the lawn, keep it mowed and edged and reseed bare spots.
- Add color to the planting beds. Be careful to keep your color choices aligned with the home’s architecture. In other words, don’t add cottage garden-type flowers to a bed in front of a starkly modern home. Certain plants are grown because of their interesting and colorful foliage, such as hosta and coleus, and are better suited to more modern homes. If you have questions about what to plant, consult with the experts at your local nursery.
- Plant a tree. Yes, it sounds like an Arbor Day slogan, but planting a tree in your front yard pays off by helping cut energy costs in the summer (if strategically located to shade the house) and by adding value to the home. Not sure which tree to plant? Use the fun National Tree Benefit calculator to assist you with making the right choice. Just enter your zip code and the calculator will bring up a list of trees suited to your region and let you know the benefits of each.
We’ve only barely scraped the surface of this important topic here. Check out these time-tested curb appeal boosting tips to learn how to get more money for your home when you decide to sell!
7. Refurbish the Basement
Converting the basement into a finished room adds usable square footage to the home. Finishing basements is one of the best ways to increase your home’s value as it transforms unfinished basements – glorified storage space – into a usable, attractive room.
Consider the following basement bar. Who wouldn’t be willing to splash out thousands for the privilege of owning something like that?
Here is a short list of rooms your basement can become – and accoutrements to put inside it – if you choose to renovate it:
- Sports den – Big screen TV, sports memorabilia, overstuffed couches and cushy carpeting
- Lounge – Pool table, wet bar, dark hardwood floors and a poker table
- Children’s play area – Playset, soft furniture like beanbag chairs, arts and crafts table and bins and shelves for toys and books
8. Additional Storage
Most new homes come equipped with lots of storage. Older homes, on the other hand, tend to lack even some of the basic storage options, such as a coat or linen closet. If you lack the space to expand closets or other storage spaces or build new ones, consider redesigning the spaces you do have.
There are specialty stores now dedicated to nothing but storage solutions. Do-it-yourself projects may include adding a complete closet system or adding organization details to a pantry.
9. Additional Square Footage
Every 1,000 square feet added to a home raises the value by more than 3.3 percent, according to a 2003 study for the National Association of Realtors®.
While that percentage doesn’t sound significant, when you put it into numbers it makes a lot more sense. For instance, if your home is valued at $200,000, a 3.3 percent increase adds an additional $6,600 to the value.
Additionally, the 3.3 percent statistic can most likely be adjusted upward based on the age of the study. The study also claims that each additional bedroom adds 4 percent to the value of the home.
Each additional bedroom adds 4% to the value of the home.
If your laundry is located in the basement, the value of your home decreases by two percent, so if you plan on adding square footage to the home, build a laundry room on one of the upper floors.
10. Miscellaneous Home Improvements
There are many small items you can add to the home that buyers will perceive as adding value. Some of these include:
- Alarm systems
- Water filtration system
- Luxury touches such as an upgraded dishwasher, whirlpool bathtub and built-in wine coolers may peak the buyer’s interest. Luxury homeowners can take this a step further by adding an in-home theater and additional spa-like features to the bathrooms.
Caveat – Invest in Home Improvements Wisely
One of the most important things to keep in mind when considering any home improvement project is to not go overboard. The value of your home is partially determined by the value of your neighbor’s homes, so don’t make improvements that bring your home’s value significantly over the general value of other homes in your neighborhood.