By Living Room Realty, June 7, 2023
In the world of residential real estate, not all home upgrades are created equal. Whether you’re getting your house ready to sell or you’re planning to stay put for a while and want to know which projects to tackle first – this post is for you!
I often talk with my clients about which home upgrades are best for resale value, or provide the best Return on Investment (ROI). This info is relevant for both home buyers and sellers, as savvy buyers want to know which upgrades are worth the most when they’re searching through listings for their next home.
The most effective strategy to find out this information is to reach out to your trusted real estate professional. Experienced Real Estate Agents will use detailed knowledge of your house and the local housing market to personalize their recommendations for the type of home upgrades that will add the most value to your specific home.
Upgrade vs. Update: this blog post concerns Home Upgrades, not updates. The difference for the purpose of this article is fairly important: while updating your home with fresh paint, clean floors and crisp landscaping will help your home sell for top dollar, they generally won’t affect the starting value of your home as much as larger remodeling projects.
For a more general idea of the types of Home Upgrades that give the best return on investment ROI, consider the following:
Exterior projects – according to the Remodeling 2022 Cost vs. Value Report (www.costvsvalue.com), improvements to the exterior of the home have consistently ranked highest in terms of Return on Investment for homeowners. Projects that increase your home’s curb appeal and add value include: garage and front door replacement as well as new siding and windows.
Modest Kitchen Remodel – the key here is to bring the kitchen up to a standard that MOST buyers will appreciate, without going overboard. The reason is fairly straightforward: not every buyer has the same aesthetic as you. Make the kitchen “workable” for most buyers and let them do their own reimagining after they purchase it from you!
Systems Upgrades – upgrades to the systems of the home (including adding or installing new HVAC, overhauling old plumbing and electrical) are less exciting, but I always point these out to my buyers. In the Portland Metro Area, you’ll see homes listed with the Home Energy Score (HES) which helps buyers estimate the monthly utility costs of the home. Energy efficient upgrades should improve the HES score of your home. While the ROI might not be as high for these upgrades, they can provide immediate benefits to you as the homeowner AND should appeal to buyers when you decide to sell.
Structural Upgrades – the structure of the home will sometimes need to be upgraded and can help with resale value. In the rainy Pacific NW, a new tear-off roof, water drainage system and/or seismic upgrades are worth a lot to my buyers! These upgrades are hard to quantify in terms of ROI, but the peace of mind these upgrades provide can be worth their high price tag.
ADU/Additional Structures – adding an additional structure or creating a legal ADU in your home can provide additional income opportunities to you as a homeowner, and in some cases can be used to help a buyer qualify for the loan to purchase your home. If you’re considering this type of home upgrade, be prepared to do your homework by researching your local laws and guidelines for building permits, finding multiple bids for construction costs and be sure to seek advice from your Real Estate Agent throughout the process.
Disclaimer – while the information in this post is meant to be helpful to homeowners, these are mostly my opinions. Ultimately, these opinions can’t be applied to every home in every situation, so it’s best to consult with a Real Estate professional when you’re ready to pick up the sledgehammer!
Sources:
https://www.remodeling.hw.net/cost-vs-value/2022/
