Home Improvements and Resale Value
In addition to the (extensive) cleaning and de-cluttering that most real estate agents recommend, many people decide to do some remodeling projects before selling their home. This is a good idea – but it’s important to remember that in terms of resale value, not all home improvement projects are created equal.
Certain home improvement projects have a much greater return on their investment. The National Association of Realtors, in conjunction with Remodeling Magazine, implements a comprehensive “Cost vs. Value” study that provides average return rates on all types of home improvement projects, by region.
The latest version of their study lists projects such as the installation of a new steel door, replacing the garage door, adding a deck, and converting an attic to a bedroom as having high return values. A minor kitchen remodel also pays off well, with an average of 72% of the cost of the remodel recouped at sale. Of the other rooms, bathroom improvements are generally the best value.
While a 75% return rate may not sound impressive, keep in mind that making these improvements will likely shorten the time it will take to sell your home. For many, this means fewer months paying for two mortgages, rent plus a mortgage, or rental of a storage unit.
Smaller fixes that aren’t included in the study can also have a positive effect on your home’s presentation - and therefore, the time it takes to sell and the end price. These include simple improvements such as replacing cabinet hardware and outlet plate covers, putting a fresh coat of paint on interior doors, and even things like buying a nice new welcome mat to greet visitors.
There are a few other things to keep in mind when remodeling your home before selling it. First, try to keep your upgrades in line with both your house and the area you live in. If all of your neighbors have laminate counter tops, going for top-of-the-line granite probably won’t be worth it. And don’t concentrate on improving one room to perfection while others are badly in need of updating – it’s better to make smaller improvements to all rooms that could use it.
Last, there are some home improvement projects that can have a negative effect on resale value. Garage conversions and swimming pool additions top this list. Most buyers would rather have a garage than an extra room, and many people don’t want the hassle or the liability of a pool.
All of that said – if you’re about to list your home for sale, it’s probably a good idea to consider the cost vs. value of a remodeling project before undertaking it. But if selling your house is a few years away, it’s most important to do what will please you, without worrying about hypothetical future buyers.
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