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Home Improvements That Pay Off

Apr 11, 2017 5 min read Kathryn Van Druff

Key Takeaways

  • Think ahead: Is there a "For Sale" sign in your future?
  • Make a budget. Stick to it. Repeat.
  • Three rules of renovation: location, location, location.


Daydreaming about brilliant home upgrades and much-needed renovations is a normal part of home ownership. Just imagine your master bath with that relaxing soaking tub, or your freshly finished basement complete with a fully-equipped media room. When you actually stop to think about it, you'll likely find no shortage of tasks on your home improvement wish list. Of course, some things take precedence over others — like a replacement for an aging roof despite your musings of a gourmet kitchen that would excite Gordon Ramsay himself. But when it all comes down to nuts and bolts, not all home remodeling projects are created equally, especially when it comes to resale value.



Knowing about renovation resale values can help to guide your home improvements successfully to completion, both as a homeowner and as a future seller, should you decide to move. Consider these key points about the resale value of home renovations to aid in your decisions.


Reflect on your intentions

Whenever you begin any home renovation project, it helps to know your family's future plans. If you don't consider this to be your forever home, will you be moving soon or several years down the road? If the answer is yes, you may want to keep your future buyers' preferences in mind just as much if not more so than your own.

With this in mind, consider sticking to neutral colors and opt for home furnishing and décor selections that convey sophistication. Resist the urge to knock down walls or to totally overhaul your closet if you aren't planning to stick around. Put yourself in the shoes of the future buyer and envision transforming your house into a home that is essentially move-in ready even if you aren't planning to leave any time soon.


Identify areas of greatest potential

Historically speaking, kitchens and bathrooms convert the best in resale value. But before you start picking out tiles and fixtures, remember to first tackle any imminent repairs before they become bigger problems. You don't want to invite water damage, structural damage, pest infestation or other secondary issues. Moreover, renovations don't hold the same sparkle if other parts of the house are falling apart.

Once you're ready to begin your upgrades, consider these top home renovation projects with the highest return on your investment:

  • Attic Insulation (107.7%)
  • Entry Door (90%)
  • Manufactured Stone Veneer (90%)
  • Kitchen Remodeling (62% to 80%)
  • Bathroom Remodeling (59% to 65%)
  • Siding Replacement (76%)
  • Deck Addition (56% to 65%)
  • Garage Door Replacement (77% to 85%)
  • New Roof (69%)

Some of the top trending home upgrades currently include a home theatre, hardwood floor in the kitchen, whirlpool bath, laundry room on the main floor, an office on the ground floor, and a kitchen island. Maintenance repairs like new siding, attic insulation, and a replacement roof or windows entice buyers as most times they just want to move in already. Eco-friendly amenities and sleek aesthetics tend to attract additional interest from buyers, making for a feel-good home upgrade that celebrates its value both now and in the future.


Understand how renovations impact resale

Setting realistic expectations can make a big difference in your plans. The first step is to understand the amount you can expect to recover on your intended renovations. Generally speaking, key factors include what you spend on the upgrade and its quality level, the value of your home, the value of the homes in your neighborhood, the local housing market, and how soon you sell after making the improvements. Imagine how you could structure a project differently knowing you'd recoup at least 75% of it, versus not being sure you'd make back any of your expenditure at all. Here are a few examples:

In the first scenario, let's say you spend $20,000 on a brand new kitchen, complete with new countertops, sink, hardware, and appliances. Then the next year you spend $10,000 on a bathroom overhaul. You've now spent $30,000 in total upgrades that you can expect to recover at a reasonable rate. For the kitchen, factor in a recovery of 62% to 80% of what you spent, or $12,400 to $16,000, plus the bathroom's improvements at 59% to 65%, recouping $5,900 to $6,500, respectively. This results in a home sale price that could be around $18,300 through $22,500.

In the next scenario, let's say you've chosen to appease your inner child with a new $50,000 swimming pool. Many financial professionals advise homeowners not to expect to recoup the money spent on pools because a fair percentage of buyers don't want to deal with all the ongoing maintenance and hassle of caring for a pool. (Of course, your backyard oasis could be the tipping point in the purchase decision for buyers who've just finished watching Pool Kings or Ultimate Pools.) That being said, some financial professionals suggest you might recover 10% to 40% of what you spend on a pool, tacking $5,000 to $20,000 onto your home's selling price. It's not even close to a total recovery, but the idea is your family would gain plenty of enjoyment over the years before you sell.

In a final scenario, it is worth illustrating that your renovations should be largely on par with the status of your neighborhood's home value. While you don't want your home to be left behind in upgrades, you certainly don't want to leave the Joneses in your dust either. By way of example, your dream $80,000 kitchen upgrade probably doesn't belong in a $150,000 home, especially where all the other homes on the block have contractor grade kitchens. A $230,000 home listed in a cookie-cutter $150,000 neighborhood probably won't command the full amount you've spent on upgrades. Instead, a more modest improvement worth around $15,000 to $25,000 would help your home to stand out for the right reasons while effectively increasing the sale price by roughly the same.


What you can do next

It's easy to let remodeling fantasies take you off the rails, but if you budget well and plan sensibly, you can upgrade your living quarters well—and boost your dollars once you sell.


Kathryn Van Druff is a freelance writer and marketing specialist at her company, Dances with Words. She has years of experience writing about personal finance as well as home design, home improvement, and landscaping topics, among others. Kate enjoys traveling and is an avid home gardener, wife, and mother to two daughters and a border collie.


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