Improvements and renovations to your home are a great way to increase value and attract potential buyers. If you’re unsure about what improvements you should focus on to get the most return on your investment, focus on these 3 main areas:
Priority #1 – The Kitchen
Ever have a party at your house? Where does everyone hang out? The kitchen! The food is a given, but the warmth of the kitchen is what keeps them there. The kitchen is truly the heart of the home and is instrumental in finding a new buyer for your property.
According to the National Association of Realtors, the kitchen is the single most important room for most prospective home buyers. Does the kitchen still sport a lime-green refrigerator and countertops? Then you’re almost guaranteed to get a low-ball offer from a buyer.If you don’t have the funds to do a complete kitchen overhaul, don’t worry. Sometimes all a kitchen needs are minor hardware upgrades that offer major effects. A new faucet, drawer knobs/handles and outlet faceplates are a good place to start. These items can give the appearance of a brand new kitchen at a fraction of the cost.
So if you’re looking for the best way to attract buyers on your next home sale, an updated kitchen is the most important remodel you can do. On average, a minor kitchen re-model costs about $10,000-20,000 and recoups anywhere from 80-100% of its cost.
Priority #2 – Bathrooms
After kitchens, bathrooms are a homebuyer’s biggest concern. Today’s buyers like to see a walk-in dual shower, vaulted ceilings, twin sinks or vanities, stone flooring and countertops. Statistics indicate bathroom renovations typically realize a homeowner an 80-100% return on their investment. Since most bathrooms have a small space, $5000 or less can go a long way.
Priority #3 – Crank Up the Curb Appeal
Small changes outdoors can really boost your home’s curb appeal for a potential buyer. Sprucing up your homes street presence can be as simple as cleaning out the gardens, replacing weather-beaten and rusted house numbers and outdoor light fixtures, and bringing more definition to the main entrance. Here’s how $1,000 budget can create the biggest impact:
- Replace the Lawn. Nothing is more of an eyesore on your homes curb appeal than a weed ridden or yellow lawn. Ripping up your existing lawn and replacing it with sod will positively impact your home’s value. Just don’t forget to water!
- Spruce up the Entranceway. Draw buyers to your entranceway with a freshly painted door and new door hardware. Complement your front door with attractive planters, flowers and a set of chairs and a small patio table. Line the walkway with a border of perennial plants or simple lighting fixtures.
Other key upgrades for success include:
- Painting. Nothing gives you better return on investment than painting. It’s cheap, most people can do it, and it offers significant and fast results. A coat of paint can update a house in a matter of hours.
- Fireplace. There are gas and electric fireplaces on the market that provide the warmth and intimacy of a real fire for a relatively small price. Update an ugly or obtrusive brick fireplace by painting it or installing a slate or marble surround.
- Lighting. From new potlights to new lampshades (or even installing dimmers), good lighting gives a home warmth and appeal.
Upgrades to Avoid
Since we now have a thorough understanding of which items render the best return on investment, let’s turn our attention to several key area to avoid:
New HVAC Systems. New furnaces and air conditioning systems may be necessary to make a home livable or saleable, but the odds are you won’t recover the cost on resale.
Swimming Pools. Studies indicate that installing a new pool will only get you a 25% or less on investment. If the average pool costs $50,000 to install, your only getting $12,300 back! While many homeowners will add these for their personal enjoyment, you won’t recoup anywhere near what you paid for, especially if the buyer isn’t a fan of swimming.
Major Landscaping. Major landscape renos can pay off if a potential buyer likes it – but who can judge another person’s taste? It might be something you enjoy while in the home, but a prospective buyer might not appreciate the effort required to keep things looking that way. Studies indicate that a $10,000 landscaping job will yield only a 50 per cent resale return.
Other bad ROI renos might include: whirlpool tubs, skylights, billiard rooms and home theatres.
Rules To Remember
1. Basic Maintenance Comes First. Before undertaking major remodeling projects, make sure you have taken care of the basic maintenance on your home such as peeling paint or wallpaper, leaks and apparent leak stains, broken doors or mirrors, etc. If you are selling your home, an updated bathroom won’t do you much good if your carpets are old and worn out, or if your exterior paint is peeling. A home with basic maintenance issues tells a potential buyer “there are bigger problems”. Fixing these types of small repairs will ensure you don’t lose much more money in the final sale price.
2. Focus on Small Upgrades, not complete Overhauls. Instead of demolishing your kitchen in a full renovation — as high as $100,000 in some homes — focus on smaller, more visible upgrades, such as installing new granite countertops, backsplashes or stainless steel appliances. Keep your costs down and use a few high-end materials to make your kitchen or bathroom look rich without having to replace the sink and other expensive-to-fix areas.Refacing or refinishing your cabinets is another cheap solution that can change the look of your kitchen by getting “new” cabinets without the big demolition work and high cost of brand new cabinets.
3. Don’t Overdo It. What’s your neighborhood like? If you are in a mid-level neighborhood, don’t go 5 stars on your kitchen because your out-of-pocket expenses would be high and you’d never recoup the money back out of the property. If you are in a high-end neighborhood, then it’s expected. Stay in line with the competition. Nicer is better, but not so overdone that the cost is out of control.No matter how spectacular your results, don’t plan on pushing your home’s value beyond 125 percent of its current selling price, otherwise you’ll be setting yourself up for big time disappointment. If you’re living on a $500,000 street, don’t renovate to an $800,000 value. You simply won’t get it back.
4. Depersonalize your Renos. If you absolutely have to install a pool, tennis court or exotic animal enclosure, go ahead. But don’t expect to recoup the cost. Think like a buyer. Would you really pay more for a property with a tennis court if you don’t play tennis? If your renovations are too personalized, a potential buyer may not find them as appealing as you do.