Whether you are getting ready to list your home, buy a home, or simply update your current home, you may be wondering which home improvements increase the value of your home and/or provide you with the greatest return on investment. In this blog, I will describe upgrades not repairs or major maintenance. Major repairs such as a leaky roof or cracks in a foundation must be addressed before further damage can devalue the home or before the home is listed for sale.
Prospective buyers most likely will not buy a home with major repairs or if they do, the sales price will be significantly reduced. In general, prospective buyers will prefer homes that have minimal maintenance or upgrading.
Assuming the home doesn’t have any major repairs, there are several upgrades that can provide a return on investment for the home owner. Listed below are the top ten exterior improvements based on National Survey data in the real estate industry. These figures are not adjusted for states or regions so the order may differ from state to state or region. Cost of materials and/or labor may also vary especially if the home owner can do the labor himself/herself.
1. Entry Door Replacement (steel) 101.8%, cost of $1230
2. Manufactured Stone Veneer 92.2% ROI, $7150
3. Garage Door Replacement (midrange door) 88.4% ROI, cost of $1595
4. Siding replacement (fiber cement) 84.3% ROI, cost of $14,014
5. Garage Door Replacement (upscale door) 82.5% ROI, cost of $2944
6. Siding Replacement (vinyl) 80.7% ROI, cost of $12,013
7. Deck Addition (wood) 80.5% ROI, cost of $10,048
8. Window Replacement (wood) 78.8% ROI, cost of $11,341
9. Siding Replacement (foam back vinyl) 77.6% ROI, cost of $15,184
10. Window Replacement (vinyl) 77.5% ROI, cost of $10,316
Since prospective buyers or visitors see the exterior of the home first, it sets the stage for expectation and interest of the home. If a home has curb appeal, buyers or visitors become more interested in going inside the home. Only one item, entry door replacement, shows a 100 percent return on investment and is one of the cheaper upgrades in comparison to the other items in the list. In replacing entry doors and windows, many owners also see a significant savings in energy bills over time. Even though some owners may not sell their home immediately, they can still enjoy the benefits of lowered power bills which provides more savings.
While these improvements are based on national survey results, I would also include another important exterior improvement related to our area in the mountains of Western North Carolina. Driveways can be treacherous in the mountains, especially in the winter time. Upgrading a dirt or gravel driveway to a paved or concrete drive on a steep slope might make a huge difference in the ability to sale the property.
While the curb appeal outside a home is important, the interior of the home is where owners spend the majority of their time. There are several interior improvements that can improve the chance of sale and increase the owner’s return on investment. Listed below are the top five interior improvements based on survey results.
1. Minor Kitchen Remodel 79.3%, ROI, cost of $19,226
2. Attic Bedroom 77.2% ROI, cost of $51,696
3. Basement Remodel 72.8% ROI, cost of $65,442
4. Bathroom Remodel 70% ROI, cost of $16,724
5. Major Kitchen Remodel 67.8% ROI, cost of $56,768
Notice that the kitchen remodel is listed twice, but the minor kitchen remodel shows the higher return on investment. The basement remodel is listed as the most expensive, but it can double the heated square footage to a home. It also can be appealing to prospective buyers who have elderly parents or noisy teenagers that need more space and privacy.
Finally, energy-saving improvements can provide savings to the owner long before he/she sells a home. Savings include power bills, painting, cleaning, and other maintenance. If buyers are aware that the owner has upgraded the home for energy savings, it might help sell the home faster when the buyers realize they will have less money to pay out after a monthly mortgage. The top five energy-saving home improvements are listed below.
1. Siding Replacement (foam backed vinyl) 77.6%, ROI, cost of $15,184
2. Window Replacement (midrange vinyl) 77.5% ROI, cost of $10,316
3. Window Replacement (upscale vinyl) 74.9% ROI, cost of $13,837
4. Entry Door Replacement (fiberglass) 72% ROI, cost of $2,926
5. Window Replacement (wood) 71.9% ROI, cost of $17,422
Notice that the five items listed are exterior upgrades; however, other minor interior maintenance to the home can provide additional savings including replacing caulking around windows and doors and providing door rain drips or snug door thresholds at the base of doors opening to the outside. In addition, substituting LED light bulbs can save energy as well as improve room lighting.
While owners may not be able to accomplish all of the above improvements, they can pick and choose which upgrades may provide the biggest return on investment for a current or future sale. Several factors that determine the owner’s ability to implement improvements include owner finances, likeness of homes in the surrounding neighborhood, possible city or community zoning and ordinances and home owner association restrictions. Understanding these factors can go a long way in helping the home owner to obtain the highest return on investment.
Are you thinking about selling your home in the future? To discuss what you can do to improve your return on investment for your home and further information about cost effective home improvements, contact me today.