For many homeowners, renovation begins with a desire to improve their living space. Americans spend an average of over $9,081 each year on remodeling and repairing their homes out of a desire to maintain value and an ideal space. But are these costs worth it? Should you renovate your home before selling it?
These are big questions that require detailed planning and calculating. For you, the decision to renovate your home before selling it comes down to return on investment (ROI) and the state of your home.
Here’s what you should know.
Your return comes down what area of the home you improve
Not all home renovations are created equal. When it comes to your ROI, you need to know what projects will yield more money back. Many factors play into what kind of return you will get, with size of the space and room functionality being the big ones. Even your location can affect how much of your costs you recoup.
What you need to keep in mind is that on average, most remodeling jobs only return about 65-75% of your costs, making full remodels unnecessary and expensive if you’re looking to quickly raise the value on a home before selling it.
However, careful research and focused upgrades can net you money back or make closing a sale that much easier. For example, HGTV found that a minor bathroom remodel can return 102% of the estimated $10,500 it could cost to replace bathroom features like tub, floor, toilet, sink and more. These are effective upgrades that see a positive return on your investment and make selling your home easier. But this isn’t always the case.
Alternatively, a major kitchen remodel costing $68,490 will only return approximately 58.6% of the cost, according to data from Remodeling Online. While such an upgrade might help find you a buyer faster, it is not likely to return your investment at rates approaching a profit.
For renovations that make sense before selling your home, factor in your location and trending investments worth your time and effort.
Renovations that make sense
Each renovation you consider should be researched and vetted with a contractor and financial advisor. You want to make the most return on your investment, and you need expert advice to help you make the best decision for your property.
That said, here’s where you can’t go wrong with home upgrades in 2021.
It’s all about the curb appeal
When your prospective buyers pull up to your home, the first things they see are the landscaping and the home exterior. These are huge draws for buyers and cost-effective focal points for your home improvements. Exterior home improvements are trending as excellent ways to increase the value of your home and net you money.
Remodeling Online found that most of the best investments you can make on a home today are on the outside of the home.
For example, adding manufactured stone veneer to your exterior will recoup an estimated 95.6% of the costs, regardless of where you are in US. Stone veneer is an alternative to vinyl siding and the perfect investment for a home this year. Strip away the bottom-third of siding on the front of your home and replace it with a manufactured stone façade that looks great and returns the entirety of your investment in home value. Remodeling Online reports that for 2020, this job is expected to cost $9,357.
Similarly, siding upgrades like fiber-cement or vinyl will recoup 75-77% of costs. And a new garage door will all but pay for itself at 94.% cost recouped.
From weeding to power washing the driveway, small outdoor maintenance can be a big draw on its own. When you add exterior home renovations, you are investing in a high-return, highly marketable property.
Landscaping is cheap and effective. Planting flowers, trimming and hedging, keeping lawns neatly mowed and watered—all these things create a manicured look that enhances property value and peaks buyer interest with little overhead cost. Many landscaping tasks can be undertaken as DIY projects, and through a small expense, you can help your property sell. In fact, a survey by the National Association of Realtors found that 17% of realtors thought that improved landscaping helped result in a sale in 2018.
Upgrading the exterior of your property is the best way to recoup investments in 2021, so if the outside of your home is looking a little drab, you don’t want to miss out on renovating before selling.
Minor kitchen and bathroom upgrades can also be worthwhile
Kitchens and bathrooms are essential elements of every home that will help guarantee sales and can often raise property values to recoup your costs over time. The key is keeping these upgrades minimal while still enhancing the look and feel of the home.
Adding new countertops, floors, backsplash, and appliances where possible can make a big impression on renters. For a minor kitchen remodel, recouped costs average 77.6% nationally. For a midrange bathroom, 64%.
While these return rates may not give enough of an immediate boost to property values to completely pay for themselves every time, the boost to the desirability of your property will help keep buyers interested and making competitive offers.
When renovating before selling doesn’t make sense
Home renovation takes time and dedication to bring in the value needed to recoup investments. So if you find yourself short on time and money, you may want to forgo the renovations.
The downside of this is that by forgoing renovations, you may have to take a much lower offer on your home, depending on its current state and the market in your location. You will likely be able to find buyers in cash investors and home flippers who will be eager to purchase a property they can turn a profit on, but the rates these buyers are prepared to offer might be lower than the family looking for a more long-term investment.
In any case, thorough cleaning and simple maintenance tasks will add to your curb appeal and make your property easier to sell. Power wash the exterior of your home, weed the driveway, trim the trees and hedges, and hire a professional cleaner for the interior. You can maximize your sale price with any time or budget if your have the right help.
For more information on property management and real estate investment, contact 208.properties today.
