If you are looking to sell your home, you may be aware that completing some home improvement projects can potentially increase the market value of your home. While this can be true, the value your home receives from a renovation is dependent on what you are improving and how much time and money it will require. Here, we share the four types of home renovations and their benefits.
The basics are typically what is expected of home sellers to complete before listing their homes on the market. The home’s roof, drainage system, plumbing system, and HVAC system should all be in working order before selling. Sellers should also make sure floors are solid and walls are in good condition, making repairs accordingly. Basic renovations are small and typically don’t add value to the home since they are already expected of the homeowner. Just because the basics cannot make a significant difference in increasing the home’s monetary value, subtle changes (such as putting on a fresh coat of paint) can make a difference in the home’s appeal to buyers. Sellers should focus on investing their renovation budget in the basics first, and then start to consider making larger adjustments.
While basic renovations focus on the functionality of the home, curb appeal renovations focus on making the exterior of the home as appealing as possible to potential buyers. To make a good first impression on buyers, sellers can invest in professional landscaping, exterior lighting, and outdoor furniture and decor. Curb appeal projects have the potential to slightly increase home value, but they are mainly used to get the home sold quicker. To increase curb appeal, sellers should start by performing basic landscaping, such as mowing and weed pulling, and consider planting flowers and finding inexpensive exterior decor.
Renovation projects that produce the most value are incidentally the ones that are the most time-consuming and expensive to complete. These projects include installing new wood flooring, replacing countertops and appliances, and upgrading bathrooms. According to the National Association of Realtors (NAR), these improvements can recoup 80% or more of their cost upon resale of the home. In addition to these interior improvements, exterior renovations like replacing windows, roofing, siding, and refurbishing decks and patios can also provide a large return at resale. Because these projects will require a large sum of money, sellers should carefully consider which renovation they would receive the most benefit from. For example, if your kitchen appliances haven’t been updated since the 90s, it would be worthwhile to spend the money to swap them out for stainless steel.
The last type of home renovation, passion projects, are geared towards the current owner’s enjoyment, rather than producing a benefit for a future buyer. Examples of these include swimming pools, hot tubs, wine cellars, game rooms, and ponds. Passion projects do not typically add value to a home; in some cases, the addition of a passion project may actually deter buyers. While there is no harm in investing in a project you will enjoy, when it comes time to sell, buyers may be less inclined to pay a premium for your added amenity.
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