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Home values are down just about everywhere and anyone thinking of selling a home right now is trying to come up with ways to make their home stand out among a huge inventory and very picky buyers. There’s a lot that a seller can do with pricing to make their home more attractive to buyers but many homeowners simply don’t have the luxury of reducing their price too much because they’re already underwater on their mortgage loan.
One of the most common ways to attract potential buyers is with upgrades and modernization of the home. Every time you spend money upgrading your home, whether it’s a fresh coat of paint on a wall or a full kitchen remodel, you’re making an investment. Like any investment, the return can vary and in a market like this, the return on every dollar invested in renovation and remodeling projects is getting smaller and smaller. Because of this, homeowners should be more selective in the types of projects that they take on. Here are some tips to consider.
Renovate Outside First: Curb appeal is a huge driver of traffic in a market like this. The average neighborhood in many markets has multiple homes for sale and when they’re in a similar range of prices, the best looking homes from the street are going to be the ones getting most of the action of potential buyers. If you have a limited budget to use in upgrading your home, consider fixes to the outside first. One of the best returns on invested capital in renovation projects right now is in new siding, where homeowners are recovering well over 80% of the amount they spend on the project in the form of a higher home sales price. Other projects, such as a fresh coat of paint, a new roof, or an attractive landscaping effort can also lead to greater interest from buyers.
Pick Projects Carefully: Do your homework to determine what kinds of projects are paying off the most. You might love the idea of a new kitchen, but the average kitchen remodel right now is costing homeowners over $111,000 and is only increasing the value of their home by a little over $70,000, or 63% of the cost of the project. Finishing a basement, on the other hand, is likely to result in a recovery of more than 80% of the costs of the remodel on average. There are some projects that are simply not worth doing because they won’t add enough value to your home to be worth it unless you plan to live there and enjoy the changes for a while.
Appearance Matters: Sometimes the least expensive upgrades make the biggest difference. New paint and carpets throughout the house for example, or new hardwood floors or granite countertops in the kitchen, can get a home sold much more quickly and there is financial value in a quick sale. In a seller’s market homes will sell without much more work than washing the windows and vacuuming the carpets. In a market like this, people are looking for a new, clean feel and they’re not in the mood for projects that they’ll have to take on before they can move in.
