It’s the million-dollar question that every seller ponders. As a seller, should you undertake renovations in hopes of increasing your home's sales price? Because every property is different, some homeowners will need to spend money on their property to make a sale and others won’t. This depends not only on your property’s current condition, but the condition of your local real estate market as well. So, what is the deciding factor?
It comes down to the return on investment, or ROI. The cost of improving your house before selling should result in a sales price that is higher than what you put in. This can be tricky to gauge, but a good real estate agent will be able to help you evaluate different levels of investment to determine what will be the most effective in your particular situation. If you are going to spend additional money on your home, it’s vital to ensure that this investment is going to be put to good use and result in a higher profit on the sale of your home. So, in general, what improvements provide the best rate of return? Read on to find out.
Best Improvements for a Home’s Interior
As discussed in my Market Ready Guide (download for free here), the condition of a home is the second component, out of three, to a successful sale. You want your home to look and smell clean to give potential buyers a sense that your house has been well maintained. Nobody wants to buy someone else’s mess.
However, in terms of spending money to prepare your home for sale, my philosophy is to put one dollar in where you can get two dollars back. Otherwise, don’t do it.
In my experience, the top three home improvements that get sellers the best return on investment are:
- Decluttering: Get rid of junk! Potential buyers want to be able to envision their furniture fitting into your house. Clutter can make a spacious room seem cramped. If your house has too much furniture, consider taking some things out and putting them in storage, if they are going with you, or donating/selling items that you want to leave behind. Decluttering often results in a 250% ROI.
- Vertical Surfaces: Paint is one of the cheapest renovations that has the best return on investment. Paint walls a neutral color, such as beige or off-white, and get rid of any busy wallpaper. Window cleaning is also important and can be done by professionals for a minimum cost. These improvements bring a two-for-one return.
- Horizontal Surfaces: If your carpet is in fairly good shape, it may just need a professional cleaning, otherwise, you may want to look into replacing it. Hardwood floors should be refinished if there are lots of scratches and cracked tiles in kitchens and bathrooms should be repaired. This also brings a two-for-one-return.
In addition to these improvements, you should give your home an overall deep cleaning and do your best to get rid of odors that might offend buyers, especially if you own pets or are a smoker. You should also repair any obvious minor defects (like leaky faucets, loose hardware etc.).
While it’s important to make the inside of a home sparkle, it is the exterior that first catches a buyer’s eye. So, what time and investment should sellers focus on regarding a home’s exterior?
Best Improvements for a Home’s Exterior
The old saying “you never get a second chance to make a first impression” is true of the exterior of your house. Curb appeal is key to drawing potential buyers into your house. Ensuring that your house is well-polished on the outside will invite prospective buyers to see what is on the inside.
Below are some inexpensive ways to enhance your curb appeal without breaking the bank:
- Apply a fresh coat of paint to the front door
- Power wash the driveway and walkway leading to your house as well as the porch, deck, and patio
- Re-seal an asphalt driveway
- Repair loose siding and caulking
- Repair or replace loose or damaged roof shingles
- Keep the lawn edged, cut, and watered regularly
- Remove any large shrubs or trees that might block your house from view
A few years ago, I listed a charming, but smaller home in Bethesda, MD. A huge tree was blocking the front door and two front-facing windows. I recommended that the sellers remove the tree and it made a world of difference. Potential buyers could now see the front door and entryway, and the home looked larger without the tree obstructing half the house. Needless to say, the home sold in less than a week!
Longer-Term Home Improvements
If you plan to be in your home for a few more years, you may want to take on a more involved project that you can enjoy while still living there and would also raise the value of your house. For instance, according to the Remodeling 2016 Cost vs. Value Report, in the DC metro area, the average cost of a minor kitchen remodel is $20,742, but most sellers recoup 96.4% of the cost. Download my Market Ready Guide to learn the average expenditure of other longer-term projects and the average cost recouped.
If you are selling sooner rather than later, you may be asking whether you should update the kitchen or any of the bathrooms. These are the rooms that potential buyers tend to focus on when touring and evaluating homes. My view is that if you own an older home in its original condition with the original fixtures, I would not invest in major renovations. The house will attract buyers who want to make a house their own with their own aesthetic. In most instances, the house will need to be priced accordingly, which could be below the value of other homes on the market if they are more updated. However, if the house is in a highly desirable neighborhood where homes don’t come on the market very often, you may be able to still get top dollar for your home even if it is in its original condition.
If you own a home that is partially updated, the decision whether to do additional renovations is more of a case-by-case basis. Your Realtor® should prepare a local neighborhood analysis, noting the condition of other homes similar to yours that are on the market or recently sold. That will give you an idea of what your home could sell for in its current condition or with some more significant updates.
What is Your Home Worth?
If you are planning on selling your home in the next month, or even the next year, and want to know how much your home may be worth, contact the trusted Realtors® at the Eric Stewart Group for a FREE home valuation at no obligation. It’s never too early to start the planning process and getting professional input on your home’s market value.
