Spring is home improvement season!
Whether making renovations to please yourself or potential buyers, think about how remodeling might increase your home's value.
Improvements that add the most value to your home
Projects that improve your home's curb appeal or refresh the look of your home's interior tend to be good investments. Zillow1 states that improvements can help attract more bids and sell homes faster too.
Topping the list of valuable improvements are painting the inside and outside, replacing carpets, and refinishing floors. Simple upgrades like a new garage door can be a good investment. The National Association of Realtors2 says a new garage door delivers an 87% return on investment. Remodeling.net3 says 97%.
The National Association of Realtors and remodeling.net also think new steel front doors and new siding are good investments. They calculate the return at 75% for both.
Major renovations might add less value
Home professionals often say large remodeling projects have lower returns on investments than small ones. The National Association of Realtors and remodeling.net estimate the return on a major kitchen renovation is around 60%.
These organizations say a major bathroom renovation is also worth about 60% and remodeling a master bedroom delivers a 50% to 60% return on investment. These projects are still worth doing. Just keep in mind that more of their value might come from making your home more comfortable.
Fancy renovations can be tricky
Realtors often caution homeowners when they talk about making "dream" renovations. That's because certain remodeling projects have limited appeal to future buyers. You may love the idea of a whirlpool tub in your bathroom. However, many potential buyers are likely to prefer a walk-in shower. Elaborate home theaters appeal to only some people. And swimming pools can be tricky. Some people love pools and some people won't buy a house that has one.
How much home improvements are really worth
Estimates of the value of home remodeling projects are just that. Estimates. Different professionals have different opinions about the value of renovations, as the numbers on master bedroom remodeling show.
Also consider the fair market value of your house compared to the sale price of others in your neighborhood in your renovation plans. Here's why. If homes like yours sell for $300,000 (the fair market value of your house) it could be hard to persuade buyers to pay more than $300,000, regardless of pricey renovations.
On the other hand, an expensive new kitchen could be a good investment if your home is worth less than surrounding houses. If the market value of your house is $250,000, and homes like it are selling for $300,000, then you might nicely improve the sale price of your house by making renovations.
How to pay for home improvements
Some homeowners might have money from their tax refunds or savings to pay for renovations. If this is you, congratulations! If this is not, don't give up just yet. There are ways to pay for renovations. Check out these home improvement loan options or request a call from one of our home loan advisors.
- Information about home selling from Zillow comes from their Consumer Housing Trends Report 2018.
- Estimates about the return on investment of home improvements from the National Association of Realtors come from their 2017 Remodeling Impact Report.
- Estimates about the return on investment of home improvements from remodeling.net come from their Key Trends in the 2019 Cost vs. Value Report.