Our homes are often our most valuable asset. While most homes will increase in value over time, meaning they will likely be sold at a profit, there are things owners can do to speed up a property’s appreciation.
How to Think About Value
While many DIY projects—such as painting interior walls—have been shown to potentially increase the selling price, projects that require a licensed contractor tend to result in more significant boosts in valuation. However, not all improvements add to a home’s worth.
“The key here is to understand there are several reasons to undertake major home improvements,” Rodriguez said. “One is to get a higher price when it is sold, while another is to make the home more enjoyable for an owner who has no immediate plans to sell it.
“Too often we’ll see a homeowner who is planning on selling the home add their dream kitchen. But then they discover the features they find highly desirable, such as their personal preferences in granite counters, appliances, custom cabinets, or backsplash tile styles, don’t always match up to what homebuyers are willing to pay more for.
“I tell my clients to think twice about assuming what a potential homebuyer might find appealing.”
Another reason to make upgrades comes down to practicality—buyers who are willing to pay top dollar want a home that is move-in ready, not one that needs work. Rodriguez suggests considering if the home’s plumbing or electrical wiring system is in need of repair, or if there are signs of damage to the roof, driveway, or other clearly visible areas.
Upgrades That Boost Curb Appeal
Rodriguez works closely with his clients to select upgrades that are more likely to add value to the home. “Based on national averages shown in the Zonda Report,” he said, “upgraded garage doors and steel front doors tend to add almost double their cost to a home’s value. For example, a garage door replacement that might cost, on average, about $4,500, adds about $8,500, while installing a high-security steel front door might cost about $2,300, but adds over $4,400 in value. They also add quite a bit to the home’s curb appeal.”
Curb appeal is what the property looks like from the sidewalk or street. It often includes features like landscaping, exterior paint or finish, the roof, windows, and doors. The sheer size of a garage door can make it one of the first things a prospective buyer sees upon arrival, making it a prime candidate for upgrade if it is in less-than-optimal condition.
Value Isn’t Always Monetary
Sometimes, upgrades that are required to make a home more attractive to potential buyers won’t add much to its value. Examples here include replacing outdated windows, installing a new roof (in some areas, lenders insist on a home’s roof being less than 10 years old in order to issue a mortgage), or resurfacing the asphalt or concrete driveway if the existing one has cracks, holes, or bare spots. These upgrades probably won’t make a big difference in the selling price, but will make the home more likely to sell at or near full asking price.
It’s always best to make improvements that can be enjoyed if the home doesn’t sell for an extended period of time. An example would be a home theater versus wood flooring that could become quickly scratched by kids or dogs. Impact-resistant windows are another fairly straightforward upgrade to consider in areas prone to windstorms and hurricanes.
Using Market Research to Find the Best ROI
When determining which upgrades might add the most value to your home, it’s crucial to research current market trends. You may find that what works in one geographic area might not apply to others.
The report explains that factors including the home’s location and the type of pool added can impact the home’s overall sales value. While adding a pool to homes in California might result in a higher sales price, the same cannot be said for homes in areas where pools are not common. In fact, the report says that while adding a pool to a home in Los Angeles might result in a sales price $95,000 above a comparable home without a pool, homes in San Diego might only experience an increase of about $20,000 in value. This makes the cost of the new pool a critical factor.
And beyond its cost, the type of pool is also a major consideration. The report suggests that an in-ground pool adds more value than an above-ground pool. The calculation is governed by the construction cost, the size and design, and the typical service life of each type of pool. Homeowners also need to factor in potentially high liability insurance costs, as well as maintenance expenses, as pools require a lot of attention to continue looking their best.
Choosing a Contractor
It’s best to work with a licensed, insured contractor, even if you as the homeowner have extensive construction skills. A licensed contractor can make renovations in sync with local rules and regulations, purchase materials at less-than-retail prices, and provide you with some recourse if the project goes badly.Carefully vet all contractors under consideration. Review the company’s website, check its insurance and license status, ask for references, and ask any relevant questions. Before any work commences, make sure any permits that may be required are in place—and keep in mind that, in some cases, work that falls under the category of a repair may not require a permit.
With the help of market research and a good contractor, you will be well on your way to having a more valuable home. The right upgrades will not only give your home a better selling price for the future, but also make it that much more enjoyable for you to live in today.
