Upgrades Increase Home Value

What Upgrades Increase Home Value? 19 High-ROI Improvements Buyers Love

 

Harvard’s Joint Center for Housing Studies estimates that Americans’ total spend on home remodeling projects will approach $340 billion in 2018, a 7.5% increase over 2017.

Does that mean homeowners have found the key to economic prosperity—expensive renovations that pay dividends at resale?

Unfortunately not…In fact, the average amount recouped for home remodeling projects is on the decline. According to a survey of real estate professionals by Remodeling magazine, this year’s average return on 21 popular remodeling projects came in at 56%, down from 64% in 2017 and 62% in 2016.

what-upgrades-increase-home-valueCredit: Remodeling Magazine 2018 Cost vs. Value Report

Nevertheless, when home prices are sky high, mortgage rates keep rising, and the economy’s putting disposable income in your pocket, many homeowners would rather pull out their checkbook to gut the kitchen than buy another home.

The key then is knowing what upgrades increase home value when the time to sell inevitably comes, as your ROI “really depends on the type of house you’re selling and whom you’re selling to,” said Alexandra Isham, program manager, design, with the National Association of Home Builders (NAHB) in Washington, D.C.

Using research from the National Association of Realtors, the NAHB, and out-in-the-field resources like top Atlanta real estate agent Leighann Russell, we put together this list of 19 home remodeling project recommendations so you can make better decisions about where to invest your money.

what-upgrades-increase-home-value

Upgrades that add physical square footage or make the home feel more spacious

Home buyers appreciate ample space. Regardless of income bracket, people who bought a home within the past three years or planned to buy a home in the next three years wanted more square footage, according to NAHB’s 2017 Home Buyer Preferences study.

1. Finish your basement

High-income buyers (those earning $150,000 and more) in the Northeast, Middle Atlantic states, and Pacific Northwest in particular like basements, the NAHB’s study shows.

“You’re adding more heated square footage,” explains Russell, which bumps up your house into another price bracket.

Even among homes ranging from $250,000 to $400,000 in Georgia, an unfinished basement can add about $15,000 to $20,000, Russell said. If finished, a basement can add even more—up to $40,000 or $50,000 to the asking price.

Finishing a basement costs between $6,500 to $18,500 (depending on square footage) and involves installing drywall, flooring, and paint. But this upgrade can carry a return on investment as high as 69%.

2. Open up the floor plan

Knocking out the right wall creates that spacious layout on buyers’ wish lists. NAHB’s survey shows that buyers favor designs that are either completely open or partially open around the living room, dining room, and kitchen.

An open arrangement allows for more natural light, which is always inviting, said Isham. “It feels like you have more space to play with.”

That said, a home still needs structural support and definition between spaces, so consult with a contractor or interior designer before picking up a sledgehammer. “If there’s no definition, it’s kind of paralyzing for a buyer: ‘How do I picture what I have in this space?’” Isham adds.

what-upgrades-increase-home-value

Upgrades that enhance your home’s curb appeal and exterior

Curb appeal is all about making a splash with buyers before they even enter your home.

For starters, attractive landscaping implies that the home is well-maintained. In fact, in a 2018 survey, 17% of Realtors said that a landscape maintenance project recently resulted in a sale. To mow the lawn, prune shrubs, apply mulch, and plant about 60 perennials or annuals over about 2,800 square feet costs about $3,000 but has a 100 percent return on investment, the National Association of Realtors said.

Other ways to make the outside stand out include:

3. Add stone veneer to the front of your house

In a midrange home, replacing a 300-square-foot band of existing vinyl siding from the bottom third of the street-facing facade with adhered manufactured stone veneer costs an average of $8,221 but recovers about 97% of that at resale, according to Remodeling magazine’s 2018 Cost vs. Value Report.

Try the slim lines and dynamic colors of Chisel Gray Stackstone, $6 to $8 per square foot, by Glen-Gery, or rounded texture of Nottingham Tumbled Ledge, $3.50 to $5.50 per square foot, by Coronado Stone Products.

4. Get a door of steel

Replacing an existing entry door with a steel one, which returns about 91% at resale, statistics show. Buyers will appreciate the energy efficiency, low maintenance, and cold-blocking powers of metal.

Try Masonite Universal Reversible Primed Steel Slab Entry Door with Insulating Core for about $75 to $110, or JELD-WEN Laurel Left-Hand Inswing Primed Steel Entry Door with Insulating Core for about $430.

5. Replace your garage door

A new garage door practically pays for itself if you reuse the existing motorized opener, recouping about 98% of your costs at resale, statistics show.

Try the Carriage House Door Co. model 305i in insulated steel with x-shaped braces and composite overlay trim for about $2,000, or the Cambridgesectional insulated steel door with composite overlay trim for about $1,400.

6. Touch up your exterior paint

If you’re on a budget, you don’t have to repaint your whole house to make it look new again.

Touch up any flaking or chips, or pressure wash the exterior to remove dirt and mold. You also can just paint the front door and trim.

A front door in a bold color like buttery yellow, powder blue, or forest green makes the entrance pop against a neutral exterior, says ProTect Painters, a painting franchise since 1995.

what-upgrades-increase-home-value

Upgrades that add style for less in key rooms

Buyers will look at your kitchens and baths and either be relieved that they don’t have to gut them or start counting up the dollar signs.

But the key with bath and kitchen remodels is to keep costs down and avoid total overhauls that don’t have great ROI. Think functional and updated, rather than breathtaking and luxury.

7. Swap out your fixtures in the kitchen and bathrooms

New drawer knobs, pulls, and faucets in a matching style give a room a cohesive, modern look, and this small, inexpensive upgrade alone can have a big impact on buyers.

Trends vary nationwide, so ask your real estate agent what buyers look for in your area.

Try brushed nickel and matte-type stainless-steel fixtures for a contemporary style, or oil-rubbed bronze if your home has a more classic look.

8. Do a minor remodel rather than an upscale one

You can do a minor kitchen remodel of a 200-square-foot kitchen for about $21,000, and recover about 81% of your spend at resale. Compare that to a major, upscale kitchen remodel, which will only get you 54% ROI.

The key money saver in a minor remodel is that you replace cabinet fronts with an updated style, such as the trendy and functional shaker cabinet fronts, and leave the cabinet boxes in place.

Likewise, a midrange remodel of a 5×7-foot bathroom of about $19,000 recoups about 70% of its cost at resale, compared to an upscale bathroom overhaul (56%).

Skip the heated floors, heated towel racks, body-spray fixtures and frameless glass enclosures.

Ceramic tile floors and new, standard fixtures will do the trick!

9. Install hardwood floors (better yet, refinish your existing ones)

The National Association of Realtors says refinishing hardwood floors recovers 100 percent of the cost at resale; new wood flooring recoups 91 percent of costs.

what-upgrades-increase-home-valueSource: nar.realtor

That said, the ROI on updated flooring depends on its current condition and your house’s price range.

“Generally, if I get to a higher-end home and the carpets are decent, I don’t advise them to replace (the carpets) because I know that someone’s going to come in and replace it with hardwood,” Russell said. Some buyers and sellers will negotiate a flooring allowance if the seller doesn’t want to take on that cost.

However, if you have pets or your carpet has seen better days, a few thousand dollars to replace it is money well spent, Russell said.

10. Paint in a neutral palette

Light, neutral wall colors make for a good palette for resale because buyers can easily imagine their belongings in the space, Isham said.

Russell agreed. “It’s just a subtle neutral that can kind of flow with everything without (the seller) having to change the entire house,” she added.

Pottery Barn and Sherwin Williams, an interior design inspiration power duo if there ever was one, offer more insights on playing with light neutrals in their video “Our 10 Best Interior Colors.”

Some shades they recommend are Agreeable Gray (SW 7029), Accessible Beige (SW 7036), and Urban Putty (SW 7532).

Interior designers Leanne McKeachie and Lana Lounsbury note that light colors add freshness and style. They suggest Benjamin Moore’s Wickham Gray (HC-171), which has a hint of blue; Benjamin Moore’s Gray Owl (OC-52), which has slight blue and brown undertones; or Benjamin Moore’s Cake Batter (CSP-215), a beige that gives the interior “a feeling of sunshine.”

If you already have neutral wall colors, painting the trim, molding, and windows with a washable and durable satin or gloss finish is a low-cost renovation that produces a dramatic change, notes ProTect Painters.

One combination that designers in the Colorado area like for an upscale look is white walls with black trim, Isham said.

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Upgrades that reduce maintenance hassles

If your house is 10-15 years old, any big-ticket items that buyers might have to repair or replace in the next few years could be off-putting. Making those repairs now helps you get your best asking price:

11. Redo the roof

Replacing a roof recovers 105% of its cost at resale, according to NAR. “A house sitting there at $250,000 with a brand-new roof is going to bring more value than the house sitting next door that’s the same floor plan with a 15-year-old roof,” Russell added.

12. Pump up the HVAC

Buyers often ask when the HVAC was installed or replaced, as well as if the home has a tankless hot water heater, Russell said.

No wonder the National Association of Realtors notes that an HVAC replacement recoups about 71% of its cost upon resale.

13. Siding that’s on your side

Is your home’s siding in good shape? Regardless, some buyers will ask about siding brands that have been in the news because of problems such as durability or mold.

So know what brand you have and when it was installed, Russell said. If you need to replace it, new fiber-cement or vinyl siding recoups about 79%-83% of its costs upon resale.

Upgrades that make your home more efficient

The majority of buyers think of green features to save on their utility bills. The NAHB notes the average price buyers would pay upfront to save $1,000 per year in utility costs rose from $7,095 in 2012 to $10,732 in 2015. These upgrades can help:

14. Replace your old toilets with low-flow fixtures

Toilet technology has improved since 1994, when federal law restricted toilet tanks to 1.6 gallons per flush (GPF).

Low-flow toilets now move less water more forcefully into the bowl with each flush. Try the Glacier Bay 1.28 GPF High Efficiency Single Flush round toilet for about $89 or Kohler’s Cimarron Comfort Height 1.28 GPF Single Flush elongated toilet for about $199.

15. Put in energy-efficient appliances

Appliances with the Energy Star symbol, the federal certification that they reduce energy use without sacrificing performance, ranked either as desirable or essential home features among nearly 90% of moderate-income home buyers in the NAHB study.

Try clothes washers such as LG’s WM3180C*, dryers such as LG’s DLHX4072*, dishwashers such as Miele’s G4976 Vi, and refrigerators such as LG’s LSXC22336*.

16. Get energy-efficient windows

Home buyers of every economic background, from those with incomes under $75,000 to those with incomes over $150,000, ranked Energy Star-rated windows among their most-wanted features, whether with triple-pane insulating glass or with low-e insulating glass, the NAHB survey says.

What’s more, replacing double-hung windows with insulated vinyl windows recovers about 74%  of the costs, notes Remodeling magazine.

However, the government’s minimum energy-efficiency standards for new windows varies nationwide based on your climate zone.

Top home improvement media brand This Old House has an online guide to these standards. The guide is broken out by region and deciphers the labels on these windows so you can shop for those that meet at least your area’s minimums for stopping heat flow, blocking the sun’s heat, and allowing a certain amount of light to enter.

what-upgrades-increase-home-value

Upgrades that cater to your area’s trends and demographics

Certain features appeal to different demographics, depending on your neighborhood as well as your price point.

The millennial generation, for instance, is forecast to spend $1.6 trillion on home purchases by 2018, according to the nonprofit consumer research entity the Demand Institute. Some of their top wants involve smart home technology, such as high-end Wi-Fi access and keyless entry.

Buyers on the older end of the spectrum, on the other hand, are thinking about convenience, accessibility, and aging in place.

Depending on the types of buyers dominating your market, consider the following upgrades:

17. Make your laundry room more accessible

A lot of home buyers prefer not using the stairs to do laundry. The NAHB survey shows 68% of moderate-income buyers and 69% of high-income buyers prefer having the clothes washer and dryer on the main floor instead of in the basement or the garage.

Some homes above $200,000 have a larger laundry room with a drop zone for children’s backpacks and shoes, or connect the laundry room to the master bedroom instead of the kitchen, Russell said.

“You’re able to access your laundry room from your master bedroom, but you also can access it from your hallway,” she said, “which is a huge trend we’re seeing right now. … especially with people buying ranches because they’re downsizing.”

18. Turn your shower into a walk-in

Although 77% of home buyers with moderate income (under $75,000) in the NAHB survey ranked having both a shower stall and tub in the master bathroom as essential and desirable, Russell said that in her area, some older buyers as well as younger ones are fine with just a shower in the master bath.

(To qualify as a “full bath” to an appraiser, a bathroom must have a full-size tub, but it doesn’t have to be the master bathroom. A tub in a secondary bathroom is fine, especially for bathing children.)

“A lot of builders in our area are not even putting a tub in the master bathroom … and if they do a tub, it’s a freestanding tub. Nobody wants a whirlpool tub anymore. They’re dirty; they’re gross,” Russell said.

A prefab walk-in shower kit costs between $800 and $2,500, based on quality and size; professional installation is extra. Consider DreamLine’s Prime Semi-Frameless Sliding Shower Enclosure or Ella’s Classic Low Threshold Shower Stall with grab bars and molded seat.

19. Install a smart thermostat

Just like energy-efficient appliances, programmable thermostats and other energy-management systems have widespread appeal, ranking among the three most-wanted home technologies in the NAHB survey.

A smart thermostat can adjust your house’s energy consumption depending on the latest gas or electricity prices, or even allow you to phone in instructions such as turning on the furnace before you get home. Prices range from $150 to $400 or more, plus installation from a trained electrician or HVAC contractor. Try Carrier’s Multi-Stage Programmable wireless thermostat.

Be strategic as you look around your home, deciding what you want to revamp so buyers see your place as someplace they want to live.

“Some buyers just don’t have the vision to see what it could be,” Russell said, but even little things can help buyers say, “You know what? We don’t have to do anything to this house. It’s perfect. Let’s go in at a strong price.”

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