Buying & Selling Houses

Which Renovations Will Increase Your Home’s Value (& Which Won’t)?

Expertise:
4 Articles Written
luxury bathroom remodel with gray tiled shower light gray cabinetry white walls and light vinyl flooring

Homeowners currently in the market are all too familiar with this question: Should you renovate or sell?

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When deciding whether to remodel or list a home “as-is,” there are multiple factors to consider. In fact, there will be a 1.8 percent drop in available homes this year due to high starting prices. While ensuring sellers in the market are receiving top dollar for their homes, taking buyers’ expectations into consideration can help when making the decision.

And although it’s no surprise some properties vanish off the market while others linger for months on end, there may be a cause.

Together, Porch.com and Homes.com surveyed nearly 1,000 homeowners to find which buyers are willing to go over budget for a move-in ready home, the most common renovations homeowners make to sell their property, and which improvements might add the most value to the selling process.

Buyer Expectations

The market is constantly changing. Buying a home, regardless of the condition, is a massive commitment. Porch and Homes.com found this year’s buyers favor a fixer-upper over a move-in ready home—50.7 percent of baby boomers and 56.7 percent of Gen X-ers favor an under-budget home in need of updating.

Overall, millennials prefer to do the renovating themselves, as only 37.6 percent would go over budget for a move-in ready home.

Ranking Priority Renovations

Since today’s buyer favors a fixer-upper, sellers should be inclined to focus on low-maintenance renovations to ensure the best investment. In fact, Homes.com finds 48 percent of homeowners suggest a kitchen remodel adds the most value to a home, with three in 10 homeowners agreeing a kitchen remodel is essential to get a home off the market.

On the other hand, homeowners also see importance in a bathroom remodel and retouching of interior paint. Survey respondents emphasized these renovations as best to increase the potential of a home sale.

Related: Survey Says: This Is What Today’s First-Time Home Buyers Are Looking For

Although homeowners believe a minor kitchen or bathroom remodel will give sellers an edge in the market, those renovations may not equate to the best return on investment.

Related: 6 Signs You Need to Lower Your Asking Price

Getting Your Money Back

Overall, doing smaller renovations to your kitchen could get you the biggest bang for your buck. A minor kitchen remodel can end up costing homeowners an average of $22,507 and net a return of $18,123 or 81 percent. Although a bathroom remodel was referred to as a “must-have” for selling potential, an asphalt roof costing around $22,000 could result in more for your efforts (68 percent) compared to a bathroom remodel (63 percent), where you’ll likely see less return.

If you’re a seller in the market looking to speed up the process, focusing on worthwhile upgrades while staying alert on the changing trends among today’s buyers might be the key.

Which home upgrades do you think are worthwhile?

Share below.

Jamie Greenberger is an Assistant Editor in the homes and real estate industry. With 2+ years experience in copywriting, editing, and research, she offers a fresh take on the real estate industry. ...
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    Marcia Towberman
    Replied 18 days ago
    As a Realtor and rehabber, I believe curb appeal is very important. The front porch and door should be an eye catcher. Keep the lawn mowed and flower beds should be free of weeds with inviting plants and shrubs. There shouldn't be any peeling paint or discolorations of the home's exterior. Gutters should be clean and the roof in good condition. If possible, try to keep vehicles in the garage or parked on the street. The driveway should be free of debris and cracks. Prospective buyers need to see the home with no distractions. Whatever you do, don't make the mistake of turning your home into the best home in the neighborhood if the surrounding homes don't measure up.
    Kees Boer
    Replied 16 days ago
    Hi, Marcia, Thank you. Just curious. Why wouldn't you want to make your home into the best home in the neighbourhood?
    Ken House
    Replied 16 days ago
    From a financial standpoint, investing money to be the "best home in the neighborhood" is not a good idea because your homes value is dependent upon your neighbors and similar homes in the area. It would be money down the drain to have a mansion in a neighborhood of small homes.
    Katie Rogers from Santa Barbara, California
    Replied 18 days ago
    "Overall, millennials prefer to do the renovating themselves, as only 37.6 percent would go over budget for a move-in ready home." More likely, millennials "prefer" an "under budget" house that needs renovation, not because they prefer to do renovations, but because by all accounts, they don't have the money for anything else.
    Calwyn Emmanuel
    Replied 15 days ago
    As a millennial in the hunt of a multi family home. Under budget definitely helps the pocket book and I personally feel like I will have more of opportunity to get the things I want out of the home sooner.
    Della Booth Real Estate Broker from Punta Gorda, FL
    Replied 16 days ago
    In southwest Florida, we have a strong seller's market with just over 3 months of inventory. For the last 5 years, the retiring baby boomer is our buyer and they want properties at budget with the renovations. The market prices prevent flips as there are no margins. Sellers are not wanting to renovate for someone else they prefer the "I might pick the wrong color" conversation.
    Jessamyn Smith
    Replied 16 days ago
    Just trying to understand, why would you put time or money into any of the renovations listed if they all recover less than 100% of the cost, if you were about to move out?
    Ken House
    Replied 16 days ago
    My understanding is that it is because the seller may be unable to sell the home for market value if no renovations were completed. It's better to take a small hit on renovation costs than to take a big hit on the selling price of the home.
    Kees Boer
    Replied 16 days ago
    Yes, I was thinking the exact same thing.
    Gary Parilis Rental Property Investor from New Jersey
    Replied 16 days ago
    Hold on... Don't take these results at face value. What matters is what buyers actually do, not what they say they will do. Having spent decades doing survey research, I can tell you consumers are not good at saying what drives their decisions. For example, people may be more inclined to say they would buy a fixer-upper (the financially "prudent" thing to do) than to actually do it. When it's time to make an offer, they may be more likely than they think to choose a turnkey property. They tend not to recognize the role of emotion in their decisions. I'd have more faith in sources available based on actual behavior. (Also, the "can't sell without it" analysis seems to be based on the sellers' perceptions, not the buyers'.)
    Ben Hilldorfer from Pittsburgh, PA
    Replied 13 days ago
    "What matters is what buyers actually do, not what they say they will do." This is an excellent point, Gary. My company does product/service development in the healthcare industry, and what customers say they want/do and what they actually want/do are often very different things. Nicely stated.
    Andrew Syrios Residential Real Estate Investor from Kansas City, Missouri
    Replied 15 days ago
    This rings true with my experience (although, with roofs, it's usually something you just have to do and not to increase value)
    Dennis Wood
    Replied 14 days ago
    Doesn't matter what the homeowner thinks ads value. It's the appraiser. I haven't seen one thread here about a Purchase Renovation Loan. Purchase a home and renovate at the same time. Seller can sell "as is". Fannie/Freddie, FHA & VA have this program.* Program parameters differ Buyers can purchase below market "as is" and build renovation costs into purchase price. Realtor and LO get paid on loan closing, not when renovation is complete. No one "loses" Just make sure renovation ads to appraised value, not just cosmetic or curb appeal.
    John Murray from Portland, Oregon
    Replied 11 days ago
    I have a flip pending to a millennial couple with 2 little ones. They are pretty sharp and it's been a 7 day inspection process. I'm a journey level guy and invested $30K in the reno. Here's the caveat, 3000 hours of my work. I'll make about $110K in profit or so. So the math is about $30 and hour but zero taxes. That's a reality check for you flippers out there. I have 8 more rentals to flip when they become vacant. I got a lot work to do.