If, like most Americans, your home is your largest investment, when it comes time to sell it (and sooner or later all houses get sold) you will want to squeeze the most money you can out of your investment. Of course improving and upgrading your house makes it more attractive to potential buyers, but proceed with caution. Not all improvements have an equal impact on the value of your home. You want to be sure that the renovations you make actually pay off—most don’t. In fact Remodeling Magazine’s Cost Versus Value Report reveals that as a group the top twenty remodeling projects only make back about 56% of the money they cost. However, within that group there are many projects that generate a much better payback and are a much better investment.
Although a new HGTV-like kitchen redo can get your creative juices flowing, something simpler like a new garage door may be a better choice. In fact, replacing a damaged, worn out garage door has a very high payback—98.3%. “Curb appeal projects tend to have higher paybacks than inside-the-house projects,” says Remodeling Magazine Editor Craig Webb. “Any real estate professional will tell you curb appeal matters a lot, and [our] numbers prove it.” The best bang for your buck will come from sprucing up the exterior of your home.
Basic efforts like improving the landscaping can add real value to your home. Many real estate experts say that refreshing your mulch, trimming shrubs, and planting colorful flowers will return more than 100% of the cost of these simple projects—many of which you can do yourself. For an updated look to your home’s exterior, consider adding stone veneer to the front of your house which also has a very good payback rate. Wood decks have a good return on investment but backyard patios do very poorly, returning only about 48% according to Remodeling Magazine.
One of the cheapest and easiest interior upgrades is fresh coat of paint. Most homeowners don’t realize how much scuff marks, handprints, and all the other abuses of daily life have taken a toll on their walls until they repaint. New paint will brighten up any room. Repainting is an especially good move if your walls are painted in unusual colors. Most real estate pros advise neutral and non-offensive colors; a medium gray is a good option.
Another way to get a fresh look is to update your flooring. Many of today’s buyers put a premium on hardwood flooring so they can help you ratchet up the price of your home. However, installing hardwood floors can get pricey, especially if you have to hire an installer. You may want to consider hardwood floors for the more visible, public areas of your house like the entry way, kitchen, or living room and opting for carpet in bedrooms, a playroom, and the basement.
Another good rule to keep in mind is that it is better to repair or replace than add or remodel. For example, if you have one or more outdated bathrooms, a few minor upgrades can have a big impact. Tile repair, re-grouting, and even replacing old toilets and sinks for a more modern look can be sensible investments. Also take a look at mirrors and light fixtures to determine if they are candidates for sprucing up. After the kitchen, bathrooms rank as the number two selling point in a house.
Speaking of the kitchen—investing in this room makes a lot of sense as long as you don’t go overboard. A minor facelift can be accomplished with fresh paint and new hardware for your cabinets. If you think your kitchen needs more help, new countertops and stainless steel appliances may be worthwhile investments. Real estate agents almost universally agree that the kitchen is the focal point of nearly every house and budget-friendly investments here will pay off at closing time.
The most important rule to keep in mind is that your upgrades and updates should be calculated to appeal to the most buyers possible. If your tastes are too unique, your investments in money and hard work won’t add a single dollar in value to your home.