FAQ #16:  What Can I Do To Increase My Home’s Market Value?

This blog is dedicated to the countless homeowners who, as we’re finishing up with the appraisal inspection, ask “well, is there anything I can do to increase the value of my home?”  Realtors, you’ll also benefit from this post because I’m sure you get asked that all the time as well!  You go to list a home, and the seller wants top dollar, right?  Sometimes to get there, they need to make some improvements.  So we’ll go over those in this blog.

What improvements to make

We’ll cover the fun stuff first, since that’s what everyone really wants to know.  Here’s a list of items that can easily be done to add value to almost any home:

1. Curb appeal.  You only get one chance to make a first impression, as they say.  And that goes for your house as well.  You want your home to appeal to as many buyers as possible, and if the yard is overgrown, the landscaping is all dead, and you’ve got a car or two up on blocks in the front yard…yeah.  Not good.  So mow your yard, plant some new trees or shrubs or flowering plants, paint the front door a nice welcoming color, and even consider painting the exterior of your home if it needs it.

2. Upgrade Kitchen & Baths.  The two areas we see remodeled the most are kitchens and baths.  We’ll go into older homes where the homeowner remodeled the kitchen, but the rest of the home is dated.  Same for bathrooms.  Why?  It’s just what purchasers want.  And, it’s the two areas where trends can easily be seen, and fixtures and appliances get a good workout.  In these rooms, you should consider adding new countertops first, then move on to cabinets/vanities, sinks, and finally appliances.  If you don’t want to shell out the tens of thousands of dollars for all new cabinets, a fresh coat of paint and some new hardware can go a long way.

3. Add Living Area.  Now we’re talking serious money, but if you can do it for a reasonable price, the return on your investment will be substantial.  This could be finishing a basement, building a full from-the-ground-up addition, or it could be a conversion of a sun room to living area, or garage to living area.  If you do go the route of converting a garage, though, make sure you’re not taking away a garage in a market where every buyer wants one.  You might end up actually losing money.

4. Energy-Efficient Upgrades.  These are the not-so-sexy improvements that no one really wants to make.  A new furnace?  Meh.  You replaced your windows?  Ok, but that’s not fun.  No, it’s not, but it can be a selling point, especially if your current components are outdated, or you live in a really old home, etc.  With the way everything is inflated right now, having a low energy bill appeals to just about everyone.

5. Clean up.  Now we go the opposite direction and list something that’s essentially free!  All this one will cost is your time, unless your home is really nasty.  Here we’re going for perception.  A clean, clutter-free home can make a big difference in how potential buyers perceive your property.  So remove excess clutter, get rid of personal items you don’t need lying around, and give everything a good top-to-bottom deep clean.

Before we move on to what improvements not to make, I want to mention that it’s super important to note that the return on investment for any remodeling project can vary depending on several factors, including the quality of the work, materials used, and definitely the specific market conditions in your area.  Before investing your hard earned dollars into any home renovation project, it’s always a good idea to consult with an appraiser to find out what bump in market value you’ll get once the improvements are completed.  Don’t take the contractor’s word for it, because they have skin in the game.  “Oh, yeah, this $100,000 pool will definitely add value to your home!”  Yeah.  Call me first.  Please.  

What improvements not to make

1. Paint.  Unless your home really needs it.  Paint colors are so trendy, and so buyer-specific, that unless every room in your home is a different color, just leave it alone.  If you do have every color in the rainbow represented, then go ahead and neutralize that bad boy with whatever is trending.  White.  Gray.  Whatever word we’re using now for tan.  Something like that.  Otherwise, one of the first things your buyer is going to do is paint.  And if you spent thousands of dollars repainting all the walls gray and they hate gray?  Money down the drain.

2. Over-improvements.  I see this one way more than I’d like.  You have an 1,100 square foot home in a neighborhood with 1,000 – 1,300 square foot homes.  But you want to go big.  Really big.  So you add on a second story and while you’re at it, you convert the garage to living area.  Now you’ve got 2,500 square feet of living area!  Yeah!!  Not so fast.  If there aren’t any buyers looking for a 2,500 square foot home with no garage, then it’ll likely take a good long while to sell.  Long enough for you to contemplate why you didn’t call an appraiser before spending your entire savings on the addition. 

These over-improvements can also be done on any typical remodel.  Want to spend $100,000 on your kitchen remodel?  Easily done!  But what if the median market value of homes in your neighborhood is $175,000?  You’re not likely to get back much on your super-high end kitchen remodel then. 

So keep in mind where you are, what buyers want, and what they don’t want.  And unless you just have all the money in the world and don’t care how much return you make on your investment, don’t over-improve for your market.

What doesn’t add value?

Let’s end with a list of a few items you can make, for sure, but lots of money won’t be one of the things you’ll be making.

1. Highly personalized improvements.  Home improvements that are too personalized to your taste may not appeal to all potential buyers.  This can be anything.  Flooring, paint, a 20-person walk-in shower, high-end lighting, you name it.

2. Maintenance upgrades.  Let’s be real.  Homeownership is tough.  Things wear out, things break, things need to be repaired.  That’s just part of it.  So even though your roof was leaking and you repaired it – even replaced half of it – you won’t likely see much return in value.  You upgraded your old plumbing infrastructure under the house to new?  Well, was it all working well before?  If so, you’ve just replaced one component with a newer one.  There was value in the original plumbing system, right?  These items, and countless others are simply necessary for the upkeep of the home and don’t usually add any market value.

3. Unpermitted improvements.  Improvements that were made without proper permits or that don’t comply with local building codes may not increase the market value of the home.  In fact, they may even reduce the value if the buyer is required to bring the home up to code, or to demo the unpermitted areas, etc.

4. Inground Pools.  Ok, so this one really needs its own category, to be fair.  But I put it here, because it can really go either way.  In my home county, I’ve been able to determine that in one market segment, a pool can bring over $40,000 in market value, while other market segments in the same county may not return a dime.  And, it’s the same in most areas across the country.  Remember that if you’re the only home in a subdivision that does not have a pool, then likely the return on your investment will be substantial.  But if you’re the only one with a pool, that tells me not many homeowners want a pool, and therefore you might not get much back on your investment.  Some buyers want a pool, and others just see it as a big money pit and safety concern, so they’ll look at other homes that don’t have a pool.

If you have a question you’d like us to feature, email me at ryanbays@riverfrontappraisals.com

For more information on this and other topics related to the appraisal process, check out our Guide To Appraisals set of E-Books at https://riverfrontappraisals.com/guides/.