When trying to sell their homes, many of my ReMax Fine Properties clients might consider undertaking a renovation or other home improvement as a way to boost resale value and minimize time on the market. However, not all home improvements deliver a strong enough return on investment to justify the time and money spent.
As eye-catching as some renovations may be, basic maintenance generally adds more value to a home’s marketability. Remodeled kitchens and baths showcasing the latest design trends will not garner an impressive sales price if the home’s fundamental systems or elements, such as the roof, landscaping, paint or even foundation, are in disrepair. In deciding how to allocate their renovation budgets, sellers must also ensure that the yard and the exterior of the home are well-maintained and inviting, as buyers may be deterred from even entering the home if it lacks curb appeal.
If your home is already in sound condition and you are considering a home improvement that will help yield a swift and lucrative sale, which projects are worthwhile?
The 2015 Remodeling Impact Report, a recent study conducted by the National Association of Realtors® and the National Association of the Remodeling Industry, examined the responses of over 4,000 homeowners and realtors to determine which home improvements carry the greatest value. While the study supported the commonly held belief that kitchen and bath remodels are the most beneficial for resale purposes, it also highlighted the strong return on investment of more overlooked improvements. Specifically, the study’s findings included:
57 percent of realtors had suggested that sellers remodel their kitchens before listing, and 25 percent believed that an upgraded kitchen had recently helped them close a sale. On average, homeowners recovered 67 percent of their expenditures on kitchen remodels.
45 percent of realtors had recommended bathroom remodels, and sellers recovered an average of 58 percent of the cost of such remodels.
Insulation upgrades, which homeowners most commonly performed in order to improve energy efficiency, delivered an average cost recovery of 95 percent.
39 percent of realtors had suggested hardwood floor refinishing, and homeowners recovered, on average, 100 percent of the cost.
Among upgrades to the home’s exterior, realtors believed that new roofing, new windows, and new or updated garage doors carried the greatest appeal for buyers. However, new roofing offered the strongest ROI, with sellers enjoying an average cost recovery of 105 percent. Thirty-two percent of realtors also believed that a new roof had recently helped them close a sale.
While the Remodeling Impact Report provides quantifiable insight into which home improvements are the most worthwhile for resale purposes, the value of any project depends upon the specific property and the neighborhood in which it is located. For example, the study found that homeowners only recovered an average of 52 percent of the cost of adding a new bathroom, but an older home that has multiple bedrooms sharing one or two bathrooms may experience a surge in value from such an addition. Sellers should also have a realistic understanding of property values in their neighborhoods, as installing top-of-the-line upgrades in a relatively inexpensive home will not deliver a proportionate return on the home’s sale price.
Thinking of buying or selling, talk to me first. I can help you with ideas on remodeling, marketing and searching for your next home.
Jeff@arizonasrealty.com or call 602-531-0435