Renovations are a great way to improve your living space and add value to your home. Just painting a room can make it feel shiny and new, but some upgrades may not be worth the investment and you may not get back what you put in. When it comes time to sell your home, you may find that some home improvements could even decrease the property’s value. Ouch!
According to the 2022 Cost vs. Value report by Remodeling Magazine, the average return on investment (ROI) for home improvement projects is 62.3%. That means you’ll only get back 62.3 cents of every dollar you spend on renovations. We’re not saying make no home improvements at all, but know that ROI can vary widely depending on the project, so pick and choose carefully.
For example, a minor kitchen remodel could have an average ROI of 71.2%, while a high-end kitchen nets you only 52.5%. Meanwhile, the average garage door replacement sees a 93.3% return. That’s a lot of cash!
Not all renovations are created equal
The 2022 U.S. Houzz & Home Study found that a whopping 55% of homeowners took on some sort of renovation in the year prior, spending an average of $18,000 per project. Whether they’re putting in the time and money to make their homes better for themselves or to boost their property value, renovating is a popular choice.
It’s important to be strategic when making updates to your home, so here are ten tips to help you move in the right direction.
Going super-duper high-end
Instead of going for over-the-top luxury upgrades, focus on practical improvements that appeal to more potential buyers. An in-home spa or chef’s kitchen may seem like a good idea, but they can put off many buyers, especially if the rest of the house is more modestly appointed. For instance, a luxury bathroom reno has a 51.5% ROI. Tone it down to a more classic mid-range level and returns increase by 2% more.
Additions can be subtractions
Adding a den or home office might not be the best choice if the project costs more than the value added and doesn’t fit in with the house’s aesthetic. The 2022 Cost vs. Value report found that adding a Master Suite had the lowest return on investment among all projects, coming in at just 46.3%. Instead, focus on improvements with a better resale ROI, like a new asphalt roof (59.6%), a wood deck (64.8%) or new windows (67.5%).
Remember, taste is subjective
When it’s time to sell, your personal style — bold wallpaper, crystal chandeliers and murals in the nursery — may not be a hit with everyone. Making the space more neutral and less unique can help potential buyers see themselves living there. And while trendy finishes — like gold faucets — might seem brilliant, they’ll eventually go out of style and make your home appear dated. Stick with timeless finishes that will appeal to buyers for years to come.
Flooring future buyers
While going for something unique, like bamboo flooring, might feel on-trend, it could be a turn-off for some. A safer bet is a classic option like hardwood. According to the National Association of Realtors, refinishing hardwood floors can give you a 147% return, the highest percentage cost recovered from a remodel job. But, if you’re planning on staying put and want your home your way, go ahead and get that bamboo flooring you’ve dreamed of!
Going overboard outdoors
Tidy yards give a home an extra boost of curb appeal and make it more appealing to potential buyers. But let’s be real, too much landscaping can be too much for buyers who want a low-maintenance home. Instead of going all out, why not keep it simple with options that won’t need constant upkeep, like native plants, gravel and less lawn. This will be easier for you — and future owners — to tend to.
Always get permission
For any renovation, make sure you’ve got all the proper permits in place. Work done without approvals can be a loud red flag for potential buyers. According to a study by the NAR, almost half of home buyers avoid listings with unpermitted work. That’s because it causes worry about property safety and legality and fear that, down the road, they’ll be required to undo what you did. So, before swinging that hammer, get a building permit.
Character vs. facelift
An extensive, expensive remodel can give an old house a more modern and functional feel, but not everyone wants that. Changing too much might eliminate the character inherent in old places. For sure, bring your old home in line with modern times, but respect things like fireplace mantels, ornate staircases, clawfoot tubs and victorian tile flooring, which can be refurbished without being replaced.
Get over the overbuild
Buyers typically want a home that fits with the rest of the community, so if your house is much bigger, fancier or different than others in your neighborhood, it can be hard to sell. Keeping renovations in line with what’s generally available will increase your chances for a good profit. For instance, if most homes on your block are single-story ranches and you tear one down to build a McMansion, you’ll stick out like a sore thumb. When upgrading, make your home more desirable to buyers by fitting in with your surroundings.
Pools aren’t always a party
Pools can be a blast, but not everyone’s getting in. Some families, especially those with young kids, worry about safety issues and steer clear. And pools aren’t cheap to build or maintain. Plus, according to the NAR’s “Remodeling Impact Report,” you’ll only get back 43% return when you sell. If you live in a region where summers are short and winters come early, you might do better investing your money into projects providing a bigger bang for your buck.
Storing your stuff
Storage can make a big difference in your home, but instead of adding value, awkward closet organizers or built-ins that don’t fit well can make your home look worse. Buyers want storage, but they’re primarily looking for livable space and turning a spare room into a storage closet defeats the purpose.
Instead, try to declutter. Not only is an organized home more appealing to buyers, it might make you fall in love with your home all over again and decide to stay!
Keep your home’s future in mind
Home renovations are a fun and exciting opportunity to make your house feel like a dream home! By making smart upgrades that will appeal to future buyers, you’ll not only enjoy your home for years to come, you’ll increase its value when you decide to sell — and get a better return on your home improvement investments.
Here are more home improvement tips for homeowners: