How to Increase Your Home's Value
To do or not to do, that is the question! There is really only one reason to try to increase the value of your home: if you’re trying to sell it or plan to in the future. If you’re not, think about your project since increasing your home’s value most likely will also increase your tax bill as well. There are many ways to increase your home’s value for resale that range from the more expensive (major remodels and additions) to free (tidying up the front yard and keeping branches away from your home). We will look at a variety of projects, noting how much value is added to your home when possible.
Before you begin any project there are a few things to keep in mind, you do not want to raise the value of your property too far above others in your neighborhood. This may be an odd statement and you may be wondering why? Reason being is that people who want expensive homes will shop exclusively in neighborhoods with similar value homes. If you own the “best and highest value house” in the neighborhood, it is less likely you will recoup whatever investment you’ve made. A good rule to keep in mind: keep the value of your home within 15 to 20 percent of your neighbors’.
A 2022 National Association of Realtors Remodeling Impact Report listed the cost recovery for interior and exterior remodeling projects. These percentages are based on the likely dollar value each project would add to the house at resale:
These are national averages, so in your area or neighborhood, the figures may be lower or higher. To explain, if you spend $10,000 on a minor kitchen remodel, you will be adding $6,700 to the value of your house. Remember that it is the perception to the buyer, and some may value items higher than others. Always try to be more neutral and not too specific or you may limit your resale prospective buyers.
Projects that may increase your home’s value include: Roofing; in-ground pool with nice deck area; flooring; substantial out buildings such as a two-car garage or finished workshop; and efficiency upgrades (insulation, windows, AC). Think twice about the following projects however, as they may not add value to your house: above-ground pool; ceiling fans; garden pond; and light fixtures.
Some tips when attempting value-increasing remodeling:
- Remodel with a larger appeal in mind. Potential buyers of your home are usually attracted more to neutral, mainstream design.
- Don’t go cheap, especially when it comes to construction. Use durable, quality materials. If you’re a do-it-yourselfer, evaluate your ability to do it right and consider the impacts of not using a licensed contractor upon sale.
- Don’t remodel in a different style from the rest of the house. Additions and improvements that look “tacked on” may detract from a home’s appeal.
- Turning a bedroom into a bathroom is a mistake – it reduces the number of bedrooms, a chief selling point.
- Don’t do a $30,000 kitchen remodel in a $200,000 house – unless you plan to continue living there. It is a waste of money.
- If you don’t sell, there are improvements that actually reduce your tax bill. Qualifying improvements are those that increase your home's value or prolong your home's life, including: a fence, driveway, a new room, addition, swimming pool, garage, porch or deck, built-in appliances, insulation, new heating/cooling systems, a new roof, landscaping, etc.
If you don’t have a lot of money, even for minor remodeling, there are lower cost ways to increase your home’s value. The following things will help make your home more attractive and inviting to prospective buyers.
Make sure the outside of your home is clean and inviting. Clean out the gutters and spray for weeds. Wash the windows and remove webs and spray for bugs. Trim the bushes, cut and edge the lawn or rake the rock, sweep the sidewalks and driveway. Plant some colorful flowers out front. The reason for these small things is simple: If two similar homes in the same are area are both for sale, the one with the cleanest and most appealing front yard will sell first.
Another area to focus on is your curb appeal. You may want to add to or improve your landscaping while you’re at it. According to a study conducted by Money Magazine, landscaping may be the best investment to improve a home's value. The study found that well-planned, attractive landscaping was estimated to have an actual recovery rate 100 to 200 percent higher than a kitchen or bathroom renovation. As always, reach out to us for any insight or advice including your free pre and post renovation market analysis.