Best Home Improvement ROI
Remodeling with ROI in mind can be a smart decision, whether you are planning to sell in six months or several years. The home you own is a significant financial investment. Therefore, any money you spend on it should improve your enjoyment and increase the property's value when you sell.
The average seller spends 2.3 hours renovating or improving their home in preparation to sell. 79% of sellers have made at least one home renovation. Only 21% of sellers list their house as-is.
Best Home Improvement ROI
The following ten home improvements offer homeowners the highest return on investment nationwide if they consider investing in significant remodeling projects. Remodeling Magazine's 2021 Cost vs. Value Report shows that these ten projects have the best ROI.
Garage Door Replacement
Cost: $3,907
Resale: $3,663
Recoup: 93.8%
Manufactured Stone Veneer
Cost: $10,386
Resale: $9,571
Recoup: 92.1%
Minor Kitchen Remodel
Price: $26,214
Resale: $18,927
Recoup: 72.2%
Deck Addition (Wood)
Cost: $16,766
Resale: $11,038
Recoup 65.8%
Vinyl Siding Replacement
Cost: $16,576
Resale: $11,315
Recoup: 68.3%
Replacement Of Entry Doors (Steel)
Cost: $2,082
Resale: $1,353
Recoup 65.0%
Window Replacement (Vinyl)
Cost: $19 385
Resale: $13,297
Recoup: 68.6%
Fiber-Cement For Siding Replacement
Cost: $19 626
Resale: $13,618
Recoup: 69.4%
Wooden Window Replacement
Cost: $23,219
Resale: $15,644
Recoup: 67.4%
Deck Addition (Composite)
Cost: $22,426
Resale: $14,169
Recoup: 63.2%
Low-Cost Home Improvement Ideas For Resale
To make your home more attractive to potential buyers, you don't need to spend a lot. However, these low-cost projects can still provide a lot of value for money.
Interior Paints New:
Natural wear and tear are typical in most homes. There may be a few scratches on walls or nails where art was once hung. These imperfections are especially noticeable in marketing photos and virtual tours. You can give your home a new look by painting it.
In general, neutral colors are best -- gray, beige, or greige walls with white trim.
A Paint Color Analysis showed that homes with light-colored bathrooms sell at a premium of $2,793.
A study concluded that white was the best color to paint kitchens. Gray is well-suited for living rooms, while buyers like dark blue bedrooms.
Curb Appeal:
Your home's exterior is the first thing potential buyers will see online and in person. It doesn't matter if they view your exterior photos online, drive by it, or attend an open house or private tour. Your home must make a great first impression.
A significant impact can be made by painting your front door. For $6,271, homes with charcoal, smoky black, or jet-black front doors were sold at a premium.
A new coat of paint can make the exterior stand out.
Smart Home Technology:
A report shows that 41% of Generation Z buyers and 47% of millennials consider smart home technology essential in their home search.
Smart thermostats are a trendy addition that is easy to use.
Research shows that homes with intelligent lights included in the listing description sold seven times faster than expected.
New Lighting:
Lighting is essential to showcase your home's features. This is especially true if you don't have much natural light. It is affordable and straightforward to upgrade your lighting. This can help make small rooms seem more significant. These are some of the steps to consider:
Install new pendants in your kitchen.
Window treatments can make your decor more attractive.
Bathroom Updates For Small Spaces:
You don't have to tear out tiles or install new fixtures to give your bathroom a makeover. 27% of sellers make minor improvements to their bathrooms before they sell. These can be straightforward fixes.
For a modern look, replace the vanity lights.
Instead of replacing the tub, you can re-flash or reglaze it.
You can upgrade fixtures to create a spa-inspired ambiance, such as installing a rain showerhead. Research showed that listing that includes the keyword "spa-inspired" led to a 1.8% increase in price.
Flooring:
Another common task is to renovate flooring. Again, this is done by 24% of sellers.
Carpets that are wall to wall clean easily.
Refinish or buff hardwoods, especially if you have visible scratches or stains.
Consider herringbone parquet flooring if you need to replace your flooring. The research found that this could increase the price by 5.0%.
In Every Market, Renovations That Don't Add Value
You can't guarantee that every home improvement project will bring more buyers or generate a high ROI. Even if you love the house while it's still yours, there are some things you might not be able to do. Avoid these upgrades if you are renovating for the eventual sale of your home.
Swimming Pools:
Buyers have a mixed reaction to pools. Some buyers love the idea of a pool in their home, while others view it as a safety concern or a burden.
Upgrades To Luxury:
It all depends on the market in your area and what your neighborhood is like. However, buyers may not be willing to spend more on high-end features such as professional-grade appliances or marble countertops.
High-End Landscaping:
As buyers may see expensive landscaping and water features as a hassle, it's not always a good investment.
Minimal Repairs: How To Fix A House Before You Sell It
Sometimes, minor repairs and maintenance can be necessary to show buyers you have taken care of your home. It can make all the difference in how quickly your home sells and what it sells for. It can also streamline the negotiation process as your buyer won't need to request repairs after an inspection.
These projects can be tackled before you take on more significant improvements:
Replace broken mechanicals, like your HVAC system or appliances.
Removing peeling wallpaper is a good idea.
Take care of overgrown and weedy landscaping.
Fix leaky or broken plumbing.
Replace cracked tiles.
Are you unsure what repairs are necessary for your home? A pre-inspection can help you get a better idea of what buyers will be looking for.
Budgeting For Home Renovations That Increase The Value Of Your Home
Before you start researching renovations that could add the most value to your home, you need to decide how much money you are willing to spend on the project and what you will pay.
Home Improvements That Cost Nothing
Cash is the best option if you have the cash. You'll avoid interest and debt. The downside is that you will have to sell your home before you can spend the money.
Financing Renovations
Many homeowners choose to finance their remodeling project, especially if they plan to sell soon after completing the project. As a result, they'll be able to pay back the entire loan amount after closing.
There are many ways you can pay for your project. However, most lenders require that your mortgage balance and the amount you borrow not exceed 90% of your home's value before they approve your loan. Lenders may consider lending you up to $45,000 if your $270,000 mortgage balance is less than 90% of the $350,000.
These are the two most common options for financing:
Second Mortgage:
A second mortgage is similar to your first mortgage. However, it allows you to borrow a set amount of money in a lump sum with a fixed rate.
Home Equity Line Credit (HELOC):
The HELOC works like a revolving credit card but is secured by your equity. While you can borrow as much as you want, the variable interest rate means that costs fluctuate over time.
What If I Don't Have The Funds To Make Home Improvements Before Listing My Property?
There are options if your budget doesn't allow for any repairs or improvements before listing:
You Sell As-Is:
This means that buyers will know you aren't making repairs before closing. To accommodate this fact, you will need to adjust the listing price. Buyers may attempt to lower the cost, mainly if the property's condition is poor.
Provide A Credit At Closing:
If the buyer's inspection reveals any problems in the house, you can give a credit that will allow the buyer to make the repairs. In addition, the buyer may request a credit, which is often higher than the cost of the repairs if they were completed earlier.
