Should you renovate your home before selling?

Which home renovations are worth splurging on depends on your goal for the project and your budget.

If you plan to maximize the value of your home for later resale, consider investing in low-cost projects with a high return on your investment. On the flip side, if your goal is to create a space tailored to your unique lifestyle, you can consider custom projects to increase the comfort and use of your living space.

What home renovations are worth the investment?

Renovations worth investing in are essential to preparing your home for a potential buyer. Depending on the current condition of your home, this could mean completing basic repairs or updating the home’s overall aesthetic for a timeless look.

says Jill Franks, principal interior designer and project manager at Freemodel, a California-based home renovation company dedicated to maximizing real estate values.

There are many home renovations to consider that will increase the value of your home, but finding a home with a high return on investment will help you determine the best use of your budget.

add build

Add a new bathroom

average price: $80,000

average value: $50,000

ROI: 63%

The total cost of the project will depend on whether you want to add a full bathroom, which includes a bathtub or shower, or a half bath that does not. Depending on how many bathrooms your home currently has and the ratio of bedrooms to bathrooms, adding an additional bathroom could make your home more comfortable to live in if you plan to stay a while, or increase property value—especially if your home currently only has one bathroom.

The cost also depends on whether you add an extra square foot to your home by adding or saving space in your existing floor plan. If you’re able to find a way within your existing floor plan, and the extra bathroom adds significant value to the price of the property, it may be worth the investment, says Franks.

Add a new bedroom

average price: $172,500

average value: $100,000

ROI: 56%

Similar to adding a bathroom, adding a bedroom is something you should only consider if it increases your comfort or the value of the property by at least twice the cost of the investment, according to Franks. This is because of the time it takes to obtain a permit to build the addition and complete the project.

This is also one of the most expensive home renovations a homeowner can do. But, if homeowners can find additional space within their existing floor plan to add an extra room, they may be able to lower the cost and timeline of the project making this investment worth it.

Reconfigure your kitchen

average price: $80,000

average value: 60 thousand dollars

ROI: 75%

A major kitchen remodel often involves demolishing existing kitchen cabinets and countertops and replacing them with an updated floor plan. This is more expensive than a simple remodel, which could be as simple as adding a fresh coat of paint and updating the hardware.

If you plan to put your home on the market, a simple update may be just what your kitchen needs to refresh the space so that a potential buyer can envision themselves in the home. But, one thing to keep in mind when selling is to avoid getting emotionally attached to your personal aesthetic and stick to timeless colors and finishes so potential buyers can imagine themselves living in the home for the long haul.

Remodel your bathroom

average price: $35,000

average value: $25,000

ROI: 71%

If your bathroom is limited in space, you can increase its functionality by revamping its existing design. This maximizes your existing space and is more cost effective than building an additional bathroom from scratch. Franks says revamping your existing space can also add a unique touch to your home that makes it stand out compared to other listings on the market.

Reconfigure your basement

average price: $57,500

average value: $49,250

ROI: 86%

If you have an unfinished basement, you can greatly increase your home’s value by finishing the space. It increases the usable spaces in your home and can make room for adding an extra room in your home.

This is also an opportunity to add an additional residential unit, such as a mother-in-law’s suite or a rentable unit. This project has become increasingly popular during the pandemic as more people needed a separate space for family members to move into, or were looking for an extra income stream to supplement their earnings, says Franks.

Revamp your home’s exterior

New roof

average price: $12,000

average value: $12,000

ROI: 100%

New garage door

average price: 2000 dollars

average value: 2000 dollars

ROI: 100%

New vinyl siding

average price: $18,300

average value: $15,000

ROI: 82%

New fiber cement siding

average price: $18,600

average value: $16,000

ROI: 86%

Replacing the roof and siding often yields high returns on your investment because they are necessary repairs and can last for decades. You can also increase the overall energy efficiency of your home which will reduce your utility bills. Not only does swapping your garage door increase curb appeal, but it also gives you the chance to incorporate smart technology that allows you to remotely close your garage door if you forget.

“Buyers nowadays want to walk into a home and feel that even if it’s not their dream home in terms of a cosmetic aesthetic, they’re walking into a home they can really live in for a while before they have to spend money,” says Franks.

Replace doors and windows

New steel front door

average price: $3,150 USD

average value: 2000 dollars

ROI: 63%

New fiberglass front door

average price: $3,500

average value: $2,100

ROI: 60%

New vinyl windows

average price: 30 thousand dollars

average value: $20,000

ROI: 67%

New wood windows

average price: $48,000

average value: 30 thousand dollars

ROI: 63%

Replacing the front door can enhance the overall appearance of your home, Franks says, but it’s not a wise investment because buyers usually focus only on whether the front door works.

Alternatively, if you have enough in your budget, consider replacing your windows. Energy efficient windows help insulate your home and prevent harsh weather from seeping through. On average, replacing old windows will reduce your energy bill by 12% – which is good news for potential buyers and will increase your overall property value.

Major renovations versus minor renovations

Major renovation: It involves a major or drastic change in the structure of your home. Major renovations and remodels generally cost more than minor updates due to the scope of the project and the materials used.

Minor update: Focuses on cosmetic changes to the existing structure of your home. Minor renovations can be more cost effective than major renovations because they generally focus on changing small details of renovating a space, such as replacing appliances or flooring.

Takeaway

Home renovation projects such as replacing roofing and siding are a surefire way to recoup nearly all of your investment. But, other projects—such as building a bathroom or bedroom addition—may cost you more to complete than the buyer is willing to pay.

When considering where you would like to invest your money in your home, you should first consider the objective of your project. “The idea of ​​the renovation is if you’re staying in that house, make it your dream home,” Frank says. “But, if you sell them, it means maximizing the dollars in your pocket.”

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