Before spending the big bucks on a home improvement project, know which upgrades make fiscal sense.
For most homeowners, the words "home improvement" conjure images of chef's kitchens, luxe master bedrooms, and spa-like en suites.
But, before sinking thousands of dollars into a home upgrade, let's first take a look at the data, talk about the best and worst return on investment (ROI) projects, and discuss some smart (and more financially sound) alternatives.
The data
In the first three months of 2019, HomeLight surveyed 1,300 top performing real estate agents about the ROI on typical home renovation projects.
Provided with an estimated average cost for each project using HomeAdvisor data, agents were asked to estimate the dollar value they thought a home would garner upon selling. HomeLight compared the agents' estimations to average cost data and then calculated the ROI for each project.
In general, the survey found that homeowners should spend less money on smaller projects rather than try to recoup money spent on larger renovations.
Best and worst ROI on home improvements
Do's and don'ts
Now that you have some ideas about how various projects shake out on the ROI scale, let's talk about the dos and don'ts that'll help you add value to your home without breaking the bank.
Do: Declutter and deep clean
When it comes time to sell, buyers have to be able to envision themselves living in the home. Decluttering, removing personal items, and deep cleaning are the first steps. Not only do they help the home show better, but they also add to your sales total, according to top agents in the HomeLight study.
The study found that if you spend $167 on a deep clean, you'll average a $1,728, or 935 percent return. Similarly, if you spend $486 on decluttering, you'll likely get a 432 percent return, leading to nearly $2,600 back in your pocket.
Another quick note, make sure the windows are clean, repair blinds and scrub the sills. According to cleaning specialist Vileda, 95 percent of buyers walked straight to the windows to look at the view.
Do: Invest time and coin into upgrading curb appeal and landscaping
On that note, landscaping and curb appeal are also crucial improvements. In today's online marketplace, buyers will scroll past a listing in seconds at the slightest hint of dislike. If they do like a home enough to go see it in person and they pull up to an unimpressive curb, they're likely to move on just as fast.
Aside from attracting buyers, homeowners will pocket a bit more cash with this upgrade. A Texas Tech University study found that landscaping and curb appeal can directly impact the value of a home by as much as 12 percent.
The HomeLight study found that basic yard care will get homeowners a 352 percent return, and fresh mulch will yield 126 percent ROI.
However, high-end landscape loses money with a -9 percent return.
Don't: Go for a full kitchen renovation
The 2017 Remodeling Impact Report, a study done by the National Association of Realtors (NAR), found that a complete kitchen renovation's estimated cost would be about $65,000, but homeowners would only recoup about 62 percent of that cost, which equals about $40,000. That's a $25,000 loss.
But that's not to say don't upgrading the kitchen at all. At a $5,000 budget, simple improvements can give the kitchen a fresh look that buyers will love. For an average of below $3,000 nationwide, you can replace countertops. Add another $600-$1,000 to repaint the cabinets and $500 for a new sink, faucet and hardware for the cabinets and drawers. You're kitchen just got a makeover.
Don't: Do a full bathroom renovation
Just like kitchen upgrades, bathroom upgrades are a bit of a wash. For an average cost of $30,000, homeowners would be lucky to get $15,000 of that back as bathroom renovations only recoup about half of the investment at sale.
Rather than doing a full bathroom reno, HomeLight's data suggests that if homeowners spend more like $10,284, at a 1 percent ROI, they're likely to get back $10,180 back.
Don't: Put in new flooring
When it comes to flooring, a 2017 NAR report found that installing new flooring gets about a 91 percent ROI. NAR and NARI Remodelers estimate the cost would be about $5,500 to install, and homeowners would likely only see about $5,000 at sale. However, refinishing existing hardwood floors provides a 100 percent return.
Making it all happen
Have questions about specific upgrades and their resale value? Before committing to any upgrade, find a trusted real estate agent who can help you understand trends unique to your market, advise on you on projects and their resale value, and point you to trusted service providers and contractors.
