How to Increase Your Home’s Value
You’ve been home now for a year and those HGTV shows are starting to get to you. So where do you start? If you’re thinking of making some changes to your home there are some that will help to increase the value of your home faster than others. You may not care right now, but if you decide to sell in the next 5 years it will make a difference.
There are ways to increase your home’s value for resale that range from the very expensive (major remodels and additions) to free (tidying up the front yard). We’ll look at the whole range, noting how much value is added when possible.
Before you begin any of these projects, it is important that you do them with the following in mind: you do not want to raise the value of your property too far above others in the neighborhood. Why? Because people who want expensive homes will shop exclusively in higher-value neighborhoods. If you own the “best house” in the neighborhood, it is unlikely you will recoup whatever investment you’ve made. A good rule of thumb: keep the value of your property within 15 to 20 percent of your neighbors’. That doesn’t mean you can’t have the nicest home on the block. Often one home renovation leads to others in the neighborhood and the next thing you know you’ve started a trend that helps values all around. But, don’t count on that. Make sure you keep your home in line with the neighborhood look and feel and price point.
The following figures appeared in the November, 2001 issue of Realtor Magazine. They list the top ten remodeling projects undertaken to increase a home’s value in the United States and what percentage of your remodeling investment is recouped at resale.
Project (average cost recouped, national):
Minor kitchen remodel (88%) - usually countertops, painting cabinets, flooring, backsplash and updated appliances
Bathroom remodel (85%) - new vanity, updated fixtures
Major kitchen remodel (81%) - think new cabinets, moving walls, adding pantry, etc.
Family room addition (80%)
Deck addition (77%)
Master suite (75%)
Attic bedroom (74%)
Siding replacement (73%)
Window replacement (69%)
Home office (55%)
These are national averages, so in your area, the figures may be lower or higher. To explain, if you spend $10,000 on a minor kitchen remodel, you will be adding $8,800 to the value of your house. Remember that it’s a tricky business, trying to add value to your home. What seems to be value to you may not appear that way to any given prospective buyer.
Projects that may increase your home’s value include: Jacuzzi (4 jets or more); permanent hot tub; in-ground pool with nice deck area; security system; sprinkler system; substantial out buildings such as a two-car garage or finished workshop; and vaulted or trey ceilings. Think twice about the following projects however, as they may not add value to your house: above-ground pool; garden pond; and light fixtures, new interior doors or closet organizers.
Some tips when attempting value-increasing remodeling:
Remodel with mass appeal in mind. Potential buyers are usually attracted more to neutral, mainstream design.
Focusing on curb appeal can be the best bang for the buck. New exterior paint, landscaping and front door along with new windows can make a potential buyer emotionally invested before they even step inside.
Don’t go cheap when it comes to construction. Use durable, quality materials. If you’re a do-it-yourselfer, honestly evaluate your ability to do it right.
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. If you’re thinking of selling try to go with the latest look/style and neutral tones. Red cabinets may seem like a good idea, but they could be a turn off to someone else.
Turning a bedroom into a bathroom is a mistake – it reduces the number of bedrooms, a chief selling point.
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 the kind of money it takes for even minor remodeling, there are low-cost ways to increase your home’s value. At the very least, the following things will make your home more attractive and inviting to prospective buyers.
Make sure the outside of your home is spic-and-span. Clean out the gutters. Powerwash the exterior of your home. Wash the windows and remove cobwebs and bugs. Trim the hedges, cut and edge the lawn, 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 area are both for sale, the one with the cleanest and most appealing front yard will sell first.
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.
For low cost landscaping ideas try affordable lighting or a fire pit.
Whatever you do, enjoy it and it will be worthwhile.