With smart home upgrades, get more buyers through the door and “wow” them once they arrives.
One of the easiest ways to increase the equity you have in your home is to add value through updates and upgrades. However, home improvements are not all created equal. We chose five that offer significant return on investment (ROI) – both in the enjoyment they’ll add to your time in the home and in the potential for a higher price when it’s time to sell.
Kitchen and Bath Upgrades
According to a National Association of Realtors survey, kitchen upgrades topped buyer wish lists, with bathroom renovations not far behind. Real estate agents and homeowners found that upgrading these spaces had a positive impact, both on the owners’ home enjoyment and on the appeal to potential buyers. In fact, 20% of agents said that a kitchen remodel had helped them close a sale.
Before you go all out, it’s wise to discuss popular styles with a real estate or design professional. To maximize your ROI, you’ll want to choose a look that’s trendy and appealing to the buyers who are looking in your market. This is an area where you can easily spend a lot, so make informed choices that are likely to pay for themselves down the road.
Doors and Windows
Exterior doors, windows, and garage doors are among the most cost-effective upgrades you can make. In fact, ROI on a new garage door was 95% in NAR’s study. These elements not only improve the way your home looks, but they can offer added security and functionality, as well as energy efficiency. Updated hardware, lighting, and other decorative elements can make these upgrades even more impactful.
According to a joint report by NAR and the National Association of Landscape Professionals (NALP), outdoor improvements substantially improve your home enjoyment and potential resale value. Lawn/ landscape improvements and maintenance, tree care, and installation of an irrigation system offer improved curb appeal and easier upkeep for homeowners. This can translate into optimal ROI: in fact, lawn service was found to return 267% of the value of the investment, while tree care returned a full 100% of the initial investment.
You can enhance the improvements to your outdoor spaces further with upgraded lighting, exterior audio, and other elements to make them more functional and attractive. In addition, an upgrade like a firepit with added seating can add even more value at minimal cost. The best part? Many lawn and landscaping improvements can be fun and easy family DIY activities, and are also affordable to outsource if needed.
It’s important to think about differences in perception of certain outdoor improvements in different climates. In the South, pergolas, elaborate decks, and pools are powerful selling points in a home sale. In colder climates where they’re only used three months a year, excessive upgrades might not generate significant ROI. Overly complicated or expensive outdoor elements can present a maintenance hassle, costing more money for upkeep than they return in utility.
We are living in the age of the open-concept floorplan, so homeowners with older homes featuring small, “chopped-up” rooms may benefit greatly from rethinking their home’s layout. While this can be an expensive upgrade, it can have a huge impact on ROI. According to the National Association of Home Builders, large, airy layouts with subtle design distinctions between spaces continue to be a dominant trend.
In addition, varying ceiling heights are popular. That means that opening up a ceiling to the roofline, whether in a great room, entry hall, or owner’s suite, is another design option that can greatly enhance your home’s appeal to buyers.
Finally, adding space for a rental unit is effective for both added equity and month-to-month cashflow potential. Per the National Association of Realtors (NAR) 2019 trend report, 27% of recent homebuyers were single adults. Many of these single buyers may like the idea of a second revenue stream to put toward the mortgage, but may not want the hassle of a roommate. A home with rental potential offers the best of both. A guest house, apartment above a garage, or renovated basement with separate exterior entrance offers you the ability to bring in a renter, which can even cover some or all of your mortgage.
Keep the following guidelines in mind to ensure the maximum ROI for your home upgrades:
- While you’ll certainly be guided by your own personal design aesthetic, be careful of changes that are highly unusual or eccentric. Overly bright or dark colors, out-of-the-ordinary finishes, or excessive theming can be off-putting to potential buyers who don’t share your taste.
- Be careful of over-the-top improvements that are out of keeping with other homes in the area. While a gourmet kitchen with top-of-the-line luxury appliances may be nice to have, you probably won’t realize solid returns on the improvement if it’s located in a neighborhood of more modest homes.
- Similarly, be careful of improvements that don’t make sense for your market or climate. While you and your family might love a pool or an elaborate outdoor entertaining space, make sure they have utility in your area.
Want to take advantage of that increased equity and refinance your current home? Simplist offers thousands of loan products from top lenders to help you find the right financing scenario for you. Get started by talking with a loan expert to check out your options.