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Boost Your Home’s Value with these Improvements.

If you plan on doing work on your home soon, you may be wondering how you can increase your home’s value at the same time. Renovating your home with an eye toward its future value can help you recoup the costs of the project – and more. But be sure to read this blog to its end, because there are also some home renovations that can lower the value of your home.

Here are five home improvement projects that can boost your home’s value when it comes time to sell.

1. Remodel your kitchen.

The biggest return on investment in home projects is the kitchen. This is where realtors and interested buyers usually spend the most time while checking out a new home. And the kitchen is the hub of many households. 

The most recent Cost vs. Value Report shows that a kitchen remodel involving cosmetic changes like new floors, cabinet fronts, and appliances, can net an 85.7% return on investment (ROI). For example, a $26,790 kitchen remodel can add $22,963 to a home sale. If you do go with a kitchen remodel, keep costs down. A major remodel, such as replacing cabinets, adding custom lighting, and expensive appliances will likely not return as much as a more modest renovation.

2. Remake your bathroom.

Next up, the bathroom. Potential buyers pay these areas extra attention. Updated walls, floors, and fixtures can really make your home more marketable. Plus, you can charge more for your home when the bathrooms have been remodeled. According to the RenoFi Renovation Index, a mid-range bathroom remodel has an ROI of 64% while an upscale remodel can net a 56% return. 

3. Upgrade your insulation.

Improving your home’s energy efficiency with proper insulation generally pays for itself when you sell your home, according to the Remodeling Impact Report. However, in addition to breaking even on the cost of the project, your home will feel warmer in the winter and lower your energy bills.

4. Convert your basement.

Converting a basement into a livable area can be another fabulous way to increase the value of your home. According to the National Association of Realtors, a basement conversion can cost $57,500 on average while bumping your home value up by $49,250 for an 86% ROI. 

5. Replace your roof.

A roof replacement is one of the most expensive homeowner jobs, so a new roof can significantly boost your home’s resale value. According to the 2022 Remodeling Impact Report, a new roof at $12,000 will easily pay for itself. However, a larger, metal roof, at $52,436, will only boost a home’s value by $28,196, netting you a 54.8% ROI.

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What determines if a renovation will add value to your home?

In addition to the type of remodeling job, several other factors can determine if home improvements will increase the value of your home, including: 
  • Current real estate market
  • Home décor trends
  • Quality of the work
  • Materials used 
  • Buyer preferences

Are there any home renovations that can negatively impact your home’s resale value?

Believe it or not some remodeling projects can actually lower home value. Here are some examples:

1. Highly personalized renovations.

In general, the more customized a project is to your own personal needs and tastes, the less likely it will have a positive effect on your home’s resale value. 

Painting your walls with bold and bright colors or adding extravagant light fixtures may seem like projects that will increase the appeal and value of your home. However, very personalized projects like these may actually have the opposite effect. Your potential home buyer may have very different taste and find it difficult to imagine themselves in the home. 

Or, you may be an empty nester, and it may seem suitable for you to convert your fourth bedroom into a walk-in closet. However, when it comes time to selling your home, a potential buyer with a family of five (three children) may pass simply because they do not want to put in the extra time and money to convert your closet back into a fourth bedroom. 

2. Luxury upgrades.

You may be in love with the new marble flooring installed in your bathroom, but a potential home buyer may not be interested in paying more for it. Consider the value of other homes in your neighborhood before spending extra on luxury upgrades like this. A good rule of thumb is keeping your renovations at a similar standard as your neighbors, especially if you are looking to sell your home in the near future. 

3. Remodels that require ongoing maintenance.

Installing an in-ground swimming pool may seem like a dream to you now, but it could negatively impact your home’s resale value. Prospective buyers may not be interested in maintaining a pool or paying the additional energy and insurance costs. Also, consider where you live. If you live in Indiana or Michigan, your pool will generally sit covered in the backyard for at least 7 months out of the year. 

It's important to enjoy your home while you live there and to make it your own but be sure to take these key tips into consideration when making decisions on home improvements. Some projects will add value and pay for themselves when it comes time to sell, and some won’t.

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All information presented on this page is for educational purposes only and doesn’t constitute tax, legal, or accounting advice. It is to be considered as general information, not recommendations. Please consult with an attorney or tax professional for guidance.
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