Upgrades That Make Cents
It always happens. You visit the home of a friend that has recently completed a remodel or update to their home and you start thinking about changes to your own home. But since you plan to sell in a few years you have concerns about increasing the value of your home to compete with similar homes in your neighborhood without overspending on upgrades that don’t provide a good return.
WHAT CHANGES DO WE WANT
A good way to begin this process is by asking yourself, what changes would work well for my family? I don’t believe it makes sense to take the time and expense to remodel your home if it’s not something that you would enjoy. Don’t add a wine room if you don’t like collecting wine just because you might have heard that others are doing that. Sometimes the best upgrades are the easiest, for example refreshing rooms by replacing tired, outdated items like carpet or paint.
LIVING IN A CONSTRUCTION SITE
The next step is to determine how your family will continue to live in the home while construction is underway. If it’s a major kitchen remodel, will you expect take out food every night, stay at a hotel or something else. A lot of advanced planning can make the project much easier.
Of course every home is different and the quality of upgrades can vary however, here is a list of some upgrades and the approximate increase in value. For the sake of this article, I have chosen more upscale items but remember large or small the percentage of value added will be similar.
KITCHEN AND BATHROOMS
The two areas of the home that usually bring in the largest value during resale is the kitchen and bathroom, particularly the master bathroom. A total kitchen remodel can cost upwards of $100,000 to $150,000 assuming you are replacing cabinetry, adding high end appliances, new flooring, plumbing, electrical to appliances and upgraded light fixtures, etc. On an average you can expect to recoup about 65% to 70% of the cost in a resale.
A remodel of the master bath can cost $35,000 to $50,000 with a similar return of around 60% to 65%. Again, this can vary depending on the replacement items you choose.
WINDOW AND DOOR REPLACEMENTS
One of the highest returns can be seen in door and window replacement. An average entry door can be replaced for $2,000 to $3,000 with a return of about 70%. A garage door will be about the same cost as the entry door with a replacement of close to 80%. Windows, sliding doors or the opening up a wall with a retractable door made out of wood or vinyl, have a similar return of about 75%.
A basement remodel can vary in cost because the options are limitless. However, in an average basement remodel a seller can expect to recoup about 70% of the cost. Finishing a basement in a previously unfinished basement adds square footage to the home and you can expect a return of nearly 80%.
How about the yard? With outdoor kitchens, upgraded landscaping and extended patios the average increase in value is 55% to 60%. I would expect it to be higher but some buyers don’t use it as much as others.
WHAT UPGRADES TO AVOID
If you live in Arizona or Florida where many homes have a pool, buyers often expect one. However, in Colorado where we have definite seasons, a pool if often looked at as an expense that isn’t used enough to warrant it. Also, buyers with small children are concerned about safety.
SPECIFIC CUSTOM DESIGNS
When designing a home that you plan to live in for many years by all means, make it your own. However, keep in mind that your taste doesn’t always match what a buyer is looking for and buyers with your very specific taste might be limited. You can’t always expect a good return on a home with extreme design choices.
WHAT IS THIS ROOM
Buyers often expect specific rooms in their home, if you convert a room in to something other than what it is intended to be it could decrease the value of your home. When changing the dining room to a cigar room, for example, buyers may have a hard time in understanding that there is no dining room in the home. Maybe it just needs a few changes to bring it back but since that's often hard for buyers to understand, this might uncheck one of the boxes for them.
DON’T OVERDO IT
When an appraiser looks at a home, he/she will value it based on what upgrades are expected to match other homes in the neighborhood. Don’t think that if you add a granite countertop the value of your home will increase if most homes in your neighborhood also have granite countertops. Make sure you don’t complete upgrades substantially larger than those of your neighbors, it just might not payoff.
I'M HERE TO HELP
If you ever have questions about upgrades or improvements to your home or if I can help you with any other real estate questions do not hesitate to contact me. I’m always available to help.