With home equity on the rise and home values going up, more and more people have decided not to sell their home. Instead, they have chosen to stay put. I count myself in this group; I love my home and my neighborhood. I’m close to the beach and even though it’s an older home, its worth fixing up.
However, now that my wife and I have decided to stay in our home instead of moving, I plan to make several home improvements to make my home more comfortable (e.g. building a backyard deck and putting in a hot tub).
Many home improvement projects don’t add value to your home, (such as my hot tub). In fact, some improvements can even detract from the asking price when you decide to sell. On the other hand, some projects can add significant value to your home.
So which home improvement projects should you invest in, and which projects should you avoid? Below are some helpful tips for home improvement projects that increase the value of your home, and home improvement projects to avoid altogether.
7 Projects That Add Value to Your Home
Many projects do add value to your home, and improve your family’s quality of life. By working on these projects now, you can enjoy the benefits and updates. If you make green upgrades, then you can also start recouping your investment in these green energy technologies once you complete the projects.
Remodeling the Kitchen
The Most Bang for Your Buck
Most people consider the kitchen to be the heart of the home, and because of this, updates in this room pay off. According to HGTV, you can expect to recoup 60%-120% of your investment on a kitchen remodel, as long as you don’t go overboard. You should never make your kitchen fancier than the rest of the house, or the neighborhood.
Why You Shouldn’t Invest in a Deluxe Kitchen
For example, a historic home in my neighborhood was on the market for more than two years. During the owner’s open house, I went in to check it out, and immediately saw why the house hadn’t sold. The quaint Arts and Crafts style home was built in 1910 and had a lot of charm. Unfortunately, the homeowners spent over $60,000 upgrading the kitchen.
The enormous kitchen, easily the size of the living room, features appliances and countertops that might look more at home in a fancy restaurant kitchen. The style, size, and quality of the kitchen don’t fit in with the rest of the house, or the neighborhood. If you plan on selling your home within the next five years, keep potential buyers in mind before you start on any major remodel; many people won’t pay for a fancy, deluxe kitchen.
Read my other article on Minor Kitchen Remodeling Projects and why they are a better value.
A Little Paint Goes a Long Way
When it comes to how much you spend on a kitchen remodel, prices can run the gamut, from $9,000 to $60,000, or more. Get the biggest bang for your buck on a kitchen remodel by looking at color. Fresh paint, in modern colors, can go a long way towards updating the look of your kitchen. Plus, paint is relatively cheap.
Replace old appliances with energy-efficient models. Energy Star-rated appliances are better for the environment, and they also help you save money, because they use less energy. Potential buyers often look for ways to save money when shopping for a new home.
If you’re looking upgrade your appliances to save energy, learn more about the best time of year to buy large appliances.
- Bathroom Addition
If your home only has one bathroom, you can recoup a large chunk of your investment by adding another one. HGTV estimates that you can recoup 80%-130% of whatever you spend adding a bathroom.
When it comes to finding room in your house for an extra bathroom, take a look at any extra rooms or underutilized spaces. Consider other spaces, such as closets or areas under the stairs, too. If you want a half-bath you need at least 18 square feet. If you want a full bath, including a stand-up shower, you need at least 30 square feet.
- Reinventing a Room
Adding more square footage to your home with a new room can be an incredibly expensive project. Although you can recoup some of your investment, anywhere from 50%-83%, this project’s costs can quickly spin wildly out of control. Just turn on any of those home remodeling TV shows; projects that start off with a $15,000 budget quickly turn into $30,000 or more when homeowners and contractors run into unexpected problems.
- Adding Energy-Efficient Windows
These days, buyers shop for homes with energy efficiency in mind. Old, drafty single-pane windows are a major turn off. Energy Star claims that adding Energy Star-rated windows can save you up to $500 a year in heating and cooling costs by making your home more energy efficient.
According to HGTV, you can expect to recoup 60%-90% of your costs when you invest in energy-efficient windows. You can also receive a green energy tax credit of 10% for this upgrade, as long as you install Energy Star-rated windows. You might also qualify for additional credits from your state, or even your utility company.
- Deck Addition
Adding a deck increases the value of your home. Outdoor living spaces have become more desirable, especially since more people stay home for vacation (i.e. referred to as a staycation). If you make your deck and your backyard more appealing, your house will be more appealing to prospective buyers when you decide to sell. HGTV claims that homeowners recoup 65%-90% of their investment by adding a deck.
- Energy-Efficient Insulation
If your home lacks basic insulation, and has old doors that let in plenty of hot and cold air, home inspectors working with potential buyers will include this in their reports. Homes that haven’t been modified with energy efficiency in mind cost more to live in and maintain.
Updating your home to save energy doesn’t have to cost a lot of money and can make your home more appealing to potential buyers. You can save $2,500 or more each year just by making some changes. For example, you can add extra insulation to your attic for $200 or less, and this small change can save you hundreds each year on your utility bill.
- Basic Updates
Basic updates add the most value to your home. Keep the paint fresh, fix the roof when it leaks, replace wood that rots, and get rid of any mold that you find. These types of chores keep your home from deteriorating over time. Buyers want a healthy, solid, safe home, and they look carefully for signs of routine maintenance.
I’ve replaced the electric wiring in my home, repainted the outside, replaced the plumbing, and repainted the interior. These projects keep my home in tip-top shape so that when I do decide to try and sell again, buyers will see a well-cared-for home.
10 Home Improvement Projects to Avoid
- In-Ground Swimming Pools
- Gourmet Kitchens with High-End Accessories
- Whirlpool Baths
- Expensive Landscaping
- Room Additions
- Home Office Remodeling
- Roof Replacement
- Garage Additions
- Necessities – According to real estate experts, some necessities, including a new septic system and new plumbing, do not generate more income when you sell your home. Buyers want to know that the sinks and toilets work, but most of them don’t concern themselves with the specifics.
You have many options for home improvement projects that add value to your home. Remember that home improvements don’t pay off like they did in 2004-2005, when the housing market peaked. If you plan to remodel, concentrate your efforts on smaller projects that make your home more appealing to budget-minded buyers. Focus on energy efficiency and small upgrades that add character and comfort to your home. Uber-luxury has become passé.
Did any upgrades you made to your house pay off when it came time to sell? What home improvement projects will you work on this year?