What if I were to tell you that there is a proven way to figure out the best home improvements to raise your home’s value – that works?! We’ll be diving deep into this subject, so hang in there since you’ll soon have a clear path on how to find your home’s issues, which areas to focus on, and how to update ones on a dime.
If you’re considering renovating to raise the value of your home, you should first consider the return of your investment, or ROI. Many homeowners are surprised to learn that most home improvement projects do little to raise the values of their homes.
In fact, according to Remodeling Magazine’s report, Cost vs. Value, most investments are not investments at all. They are not alone as the National Association of Realtors confirms this research as well.
Although a home improvement project may help sell your property faster, that does not mean you will see a return higher than your initial investment. Therefore, if you spend $15,000 to remodel your bathroom, you should not expect to raise your home value by $20,000. The ROI may only be $12,000, a loss of $3,000.
All of us have the same objective, which is maximizing our home’s potential. We will be discussing how to figure out which home improvement projects are worth your time, energy, and how to make your hard-earned money work for you, not against you.
We will do this by evaluating current market conditions with data that is available to us. But first, we need to have a fresh perspective on how to view our real estate, which is like an investor.
Find Your Problems First
To arrive at where best to spend your dollars, you first need to be aware of the issues, the real issues! The best way to do this is by viewing your home as a buyer. In doing so, you will have a very critical eye and will find the flaws that would be obvious to someone who would be interested in purchasing it.
Enlisting the help of a friend, one that will not sugarcoat or dance around the issues, would also be helpful. Be prepared for some honest feedback, and try not to take it personally. If you do, you’ll be hurting your bottom line!
Next, create a list by writing down all potential issues and problems that you would improve if you were purchasing the house for the first time. Below is an example of items that could be included in your list.
Exterior Home Improvement Projects
Interior Home Improvement Projects
Years ago, when helping Realtors stage houses for sale, we would often hear a homeowner complain about flaws they wanted us to “camouflage.” It was usually small projects. Ones they never got around to fixing.
Our solution, at times, was recommending a handyman to update, fix, caulk, and pretty up those areas. You’ll be surprised how spending a little bit in the right places could have big payoffs.
Scope Out Your Competition To Figure Out Where To Spend Your Funds
Yep!!! This is a crucial step and one that should not be skipped! Do your homework to find out your home’s estimated market and sold value pricing. Market value is determined by comparable “for sale” properties within a reasonable distance to your home.
Example: Same square footage, style home, etc. If you own a three-bedroom, two-bathroom, 1800 sq foot Colonial Home, a comparable property would be a similar house within a short distance to your home or neighborhood.
The sold value is based on comparable sold properties. You can use resources such as Zillow or Realtor.com to help guide you.
Get To Know Your Neighbors
My advice would be to visit all comparable properties so you know exactly how your house would compete in the current market. Most realtors have weekly or monthly “broker open houses,” which is when they visit properties before listing them for public showings.
This is vital to the listing agent as they collect feedback from other realtors and adjust their marketing and pricing strategies accordingly.
You may be surprised to find out that your neighbor’s house has a remodeled kitchen; however, other areas of the home are totally lacking. Remember, good decisions are made with knowledge, and this useful information will soon pay off.
Now, I don’t know about you, but I don’t gamble with my money, so plan those house visits. If you feel awkward, here’s my suggestion. Be a good neighbor, and stop by to wish your neighbors a proper farewell. Heck, bake cookies, and drop them off, and while you’re at it, scope out those properties!!
Viewing Properties As an Investor By Asking Questions
- What advantages do the current properties have over mine?
- What features of your home could you improve to be more competitive?
Now let’s review our homework and begin to prioritize our list against the current data to help calculate the best home improvement project to tackle first.
Below is an example of what your results have found:
- $270,000 is the current estimated value of your home.
- Current, comparable homes are on the market for $225-350,000.
- Properties at the high end have some home improvements. The home at the highest price point has a significant disadvantage of being located on a high traffic street.
- Lower priced properties are outdated and don’t show well.
- Sold comparable homes have sold for $265,-345,000 in the past six months.
We have learned that AVERAGE comparable properties in our neighbors have a market value of $325,000. You also learned most of the homes have some updates, but none of the properties have a large yard.
If you can’t compete with a remodeled kitchen, don’t bother. Instead, give your kitchen and other areas a mini facelift, we’ll discuss how later on, and focus on the advantages your property has. If your house has the potential of a fantastic backyard, that’s where you should spend a bulk of money.
Focus on creating a backyard oasis one that will allow you to attract the right audience for your property, which is a family with children. The other properties are NOT competitive for a family of five. In their minds, a kitchen can always be remodeled in the future, but they can’t buy a yard.
The best part is your return of investment, ROI for a home improvement backyard project will be profitable. If you spend $5,000 wisely and market the property like an investor, your ROI could be very profitable.
Now when marketing your property, you should highlight the backyard. Professionally photograph the yard and make that your featured image.
Your marketing copy could read something like this – Rare opportunity and will not last! Your beautiful park-like backyard oasis awaits you and your family.
Landscaping Is One Of The Best ROI Home Improvement Projects
Not sure where to start? No worries, did you know that most garden centers offer free design services if you purchase from their nursey? Give them a budget to work with, keeping in mind your goal is a high ROI. You will not need to splurge on rare foliage or specialty landscaping.
Accordingly to Angie’s List, the average cost for sod is about 28 to 45 cents per square foot. Therefore, for a 2,000-square-foot-lawn, expect to pay between $560 to $900. You may find it helpful to my post on 9 Ways To Upgrade Your Curb Appeal.
Full Bathroom Remodel vs. Minor Updates
According to Home Advisor, the cost of installing a new tub can set you back $1,049 – $5,529.
Our friend has made a career of house-flipping for the past 30 years. When possible, they re-glaze old tubs for a price tag of $300. They also replace or remove shower doors depending on the project to give the illusion of more space. Plumbing fixtures are updated, including the toilet handles, to provide an updated look.
Then they also update cabinet hardware, paint, and of course, they stage the décor like it’s no-ones business.
As you can see, most of these home improvements are DIY projects, which help tremendously with lowering the cost. The average bathroom renovation project will set you back $9-15,000.
Full Kitchen Remodel vs. Minor Updates
Kitchens are notorious for eating away at our budgets!!! The typical cost per square foot ranges around $75-$250, yikes!!!
When calculating the ROI on our last property, we did not feel it was a wise investment to remodel the kitchen. Here’s what we did instead. I updated the hardware for a price tag of $24, thank you Target!
The property had Formica dated cabinets, so I painted them. The product I used was a high-grade Sherwin Willaims paint, and when I was done, they looked professionally sprayed. We updated the counters and found a clearance tumbled marble subway tile at a steal for $80.
Please keep potential buyers and their home inspectors happy by repairing leaky faucets or updating plumbing fixtures. You can find resources of top reviewed kitchen faucets here.
The total investment was around $1,700, which was mostly due to the quartz countertop. The property was listed Friday evening, and on Saturday morning at 10:30, we received a call that the offering was coming with a closing to follow in 3 ½ weeks.
In case you are wondering, it was priced higher than sold values during a slow market — the other townhomes with our same footprint needed to be remodeled, which gave me the green light to up our pricing. See photos below.
Home Improvement Projects That You Should Consider
One of my favorite words in home remodeling projects – are you ready for it? TRIM WORK – I bet you would never have guessed it. It’s kind of a lost art, and that saddens me. The cost of material is relatively low, and to save money, you can opt to use MDF for your crown molding.
The Power Of Trim Work
Most financial advisors would agree that the property you reside in is not an investment. That being said, you can still make sound business decisions if you view your property as an asset.
Some of the best home improvement projects to raise your home values are ones that may be minor updates or small remodeling projects. For more home styling tips and tricks drop by anytime. Hey, we’re always up for company.