Best Ways to Add Value to Your Home
If you’re tired of the way your home looks and feels but don’t necessarily want to move, you don’t have to settle. Whether you crave more square footage, an upgraded interior or better curb appeal, you’ll find an endless supply of ideas that can improve your home’s functionality and style. But, that doesn’t mean that … Continue reading Best Ways to Add Value to Your HomeThe post Best Ways to Add Value to Your Home appeared first on MagnifyMoney.
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If you’re tired of the way your home looks and feels but don’t necessarily want to move, you don’t have to settle. Whether you crave more square footage, an upgraded interior or better curb appeal, you’ll find an endless supply of ideas that can improve your home’s functionality and style.
But, that doesn’t mean that all remodeling projects are created equal — not by a long shot. While plenty of home upgrades can be “worth it” in a financial sense, there are ways you can improve your home that may cause its value to drop as well.
Before you remodel, it pays to research the best ways to add value to your home and which projects might offer the most “bang for your buck.” With the right strategy and a professional remodeling team by your side, it’s possible to create your dream home while building equity in the process.
In this review, we’ll cover:
Benefits of making home improvements
Home improvements that can add value to your home
Home improvements that can negatively impact your property values
Benefits of making home improvements
There are plenty of ways homeowners can benefit from a home remodel, but one of the biggest perks is an increase in their home’s value. With a home addition, a new kitchen, upgraded bathrooms or big project completed, it’s very likely your home will appraise at a higher value than it did before you remodeled. That means you’ll have a larger share of equity in the property, which is any homeowner’s ultimate goal.
And in when your home is worth more, there are several benefits you’ll get to enjoy.
- The potential to remove private mortgage insurance (PMI) from your home loan: Private mortgage insurance is typically charged as an added fee when you buy a home with less than a 20% down payment. This fee can vary, but it’s usually equal to 0.15% to 1.95% of the loan amount. If your home’s value increases after you remodel, it may be possible to have your home appraised and the PMI charges removed from your monthly mortgage payment.
- Increased net worth: An increase in your home’s value could boost your net worth — the measure of all your assets minus your liabilities.
- Sell your home at a profit: The more your home is worth, the more likely you will be able to sell it for a profit if you need to move.
- Easier qualification for home equity loans: By remodeling to improve your home’s value, your ability to qualify for a home equity loan or HELOC will improve. The amount you can borrow may also be higher.
“It’s your home, and you want to be comfortable,” said Salmon, who sells real estate in the Washington, D.C., area. “I always tell my clients to make updates early so they can enjoy them instead of waiting to remodel until right before you sell.”
Another important benefit of remodeling is the fact that it may improve your home’s utility, says Salmon. The NAR survey also revealed that 36% of homeowners reported better functionality and livability as the most important result from their project.
When you think about it, that makes a lot of sense. A kitchen with a better layout or a bathroom with a new garden tub could make living in your home a more positive experience, for example.
Last but not least, remodeling your home may help you avoid moving and all moving-related costs. Remember that moving to a new home may require hiring movers, some remodeling of your new home, realtor fees to sell your home, and of course closing costs on your new home loan.
“If the space is there and you are able to remodel, the price of a big project or full-home remodel could be well worth it,” said Salmon. “There are a lot of moving costs that people don’t think about, and it is often a lot more expensive than people realize.”
Home improvements that can add value to your home
While remodeling your home can make it more appealing to the eye and more functional, the right remodeling project can also boost the value of your home. The key to increasing your home’s value through remodeling is making sure you’re choosing projects that will actually pay off.
Kitchens and bedrooms and bathrooms, oh my
According to Salmon, kitchens, master bedrooms and master bathrooms are the areas buyers pay the most attention to — as well as the areas that could add the most value to your home if you remodel. Other bathrooms in the home are also important, he says, because “buyers don’t want to have to remodel rooms they need, and bathrooms are some of the most used rooms in a home.”
Salmon also says that paint may be more important than people think.
“Paint the interior of your home so it looks clean and fresh, but make sure to choose a neutral color,” he said. Salmon notes that many buyers lack imagination, so if they walk into your home and see lots of bright colors or a lack of cohesion in the color palette, they may be scared off.
“Some people hate bright wall colors or bold wallpaper,” he said.
Open concept conversion
If you have an older home with a boxy and broken-up interior, opening up the walls to create a larger living space is often one of the best “bang for your buck” remodeling projects. “Opening up a wall that connects an adjacent room to your kitchen is huge,” said DeFeis.
Curb appeal
Last but not least, both DeFeis and Salmon agree that curb appeal is important, and that improving the exterior look of your home can go a long way toward fetching a higher sales price or just upping your home’s value.
Salmon says that planting nice bushes, adding mulch or painting your exterior door can make your home pop. You should also make sure your grass is mowed and debris is removed. “Even basic yard cleanup can go a long way,” he said.
The National Association of Realtors also offers their own list of home upgrades that can pay off the most over time. According to their study, the home upgrades they believe will increase your home’s value the most in 2017 included:
- Complete kitchen renovation
- Kitchen upgrade
- Bathroom renovation
- Add new bathroom
- New master suite
- New wood flooring
- HVAC replacement
- Hardwood flooring refinish
- Basement conversion to living area
- Attic conversion to living area
- Closet renovation
- Insulation upgrade
In terms of exterior home remodel projects, they list new roofing, new vinyl windows, a new garage door and new vinyl siding as the top four upgrades that will appeal to buyers and increase the value of your home.
Home improvements that can negatively impact your property values
While there are plenty of improvements that can be a net positive for your finances, there are just as many that can make no impact in your home’s value — or worse, decrease your home’s value.
This list isn’t all-inclusive and the type of projects that can hurt your home’s value also vary depending on your neighborhood and where you live. If you want to avoid completing updates that won’t be worth it, think long and hard before you tackle any of the projects below:
- Garage conversions
- Cost: $5,000 – $30,000 and potentially more depending on job site conditions and square footage. While it might be tempting to convert your garage into a room to increase your square footage, DeFeis says this is often a bad idea. Not only can a converted garage look awful from the road, but it could be a zoning issue as well. Further, many buyers will want a garage over more square footage and may not consider your home without one.
- Cost: $30,000 – $100,000 depending on construction materials, landscaping and upgrades. Swimming pools may be standard or popular in warmer climates, but you could limit your potential pool of buyers by adding one no matter where you live. “It depends on the buyer,” he said. “Some buyers want a pool and some people absolutely refuse to have one.”
- Cost: $30,000 – $60,000 and potentially more for a home addition depending on size. Adding onto your home can increase your square footage and make your home more livable, but that doesn’t mean all additions look great from the outside of your home. “If you’re driving down the street and your house looks out of place, then it’s not going to help your home’s value,” said DeFeis.
- Cost: $1,000 – $2,500 per linear square foot for custom kitchen cabinets, $22 – $32 and up per square foot for marble flooring including installation. While luxury upgrades like custom cabinets or Italian marble flooring may have been all the rage a few decades ago, these products seem to be taking a back seat to more mainstream products, says DeFeis. “People want the look but they do not want the luxury product anymore.”
- Cost: pricing varies. Too much landscaping can make buyers feel overwhelmed, but it depends on the neighborhood. Ideally, you’ll want your landscaping to look similar to your neighbors.
- Cost: pricing varies. Last but not least, don’t forget it’s possible to improve your home too much. Making your home a lot bigger than the rest of the homes in your neighborhood may not be a good investment, for example. “If the average price point in your neighborhood is $400,000 and your home is worth that amount but you add a $100,000 addition to your home, that doesn’t mean your home will be worth $500,000,” said Salmon.
Final thoughts
Whether you want to remodel to sell or to make your home into what you want it to be, it’s smart to research different remodeling projects to gauge your potential return on investment. While some projects can absolutely pay off, there are just as many home “upgrades” that can hurt your home’s value or make no impact at all.
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