As we enter the hottest season of the year for real estate, many investors are looking to boost their returns with last-minute home improvement projects.
And thanks to an analysis from Zillow, investors looking to increase their profits can now concentrate their efforts based on projects that drive the most value with prospective buyers.
Sellers typically have about 13 years’ worth of wear on their home, Zillow reported, which prompts an average of 2.2 renovations or improvement projects in preparation to sell their home. Such renovations are typically a good idea, Zillow found, as nearly 25 percent of sellers that complete improvement projects sell their home above list price, compared to only 16 percent of those who don’t put in the work.
“The key is making smart decisions about what to upgrade because home-improvement projects don’t necessarily pay for themselves — and some improvements actually cost more than they return in value,” Zillow wrote. “A smaller, inexpensive upgrade typically brings a bigger reward than a more involved and time-consuming one.”
Spring is almost always the best season in which to sell a home. And of the Spring season, May is typically the best month in which to list a home. Data indicate that not only do homes sell faster in May, but they on average sell for $1,600 more than the average listing throughout the year, according to Zillow.
What’s more, Spring 2019 is shaping up to be a promising season for the U.S. real estate industry. In addition to recent booming existing home sales, mortgage rates are generally staying low and home inventories are increasing.
A 30-year fixed-rate mortgage decreased to 4.37 percent in February from 4.46 percent in January, according to Freddie Mac. February home inventories grew to 1.63 million, an increase of 2.5 percent from January and an uptick of 3.2 percent since February 2018, according to the National Association of Realtors.
So to help investors maximize their home improvement budget, here are some quick projects to consider as Spring blossoms around the U.S.
New windows — Zillow reports that new, mid-range windows can return $1.15 for every dollar. If you buy too lavish a set of windows, however, you’ll likely end up breaking even.
Curb appeal projects — Top among Zillow’s recommendations are projects that increase the exterior aesthetics of your home. Walk around your home to identify what quick fixes could make the home look more attractive such as basic landscaping and yard care. Clean and repair concrete driveways and sidewalks. Repair broken gutters and downspouts. Clear out any clutter.
Fresh paint — In the vein of enhancing curb appeal, Zillow found that catchy pop of color can also go a long way. Zillow’s analysis found that yellow homes sell for nearly $3,500 less than expected, while a creative colored door can lead to an extra $6,000.
Bathroom upgrades — A mid-range bathroom remodel — which includes replacing the toilet, tub, and light fixtures, adding a double sink, tiling the floor and hanging some wallpaper — often results in a $1.71 increase in home value for every dollar spent, Zillow found. Don’t however, go overboard with bathroom revamps. Upscale bathroom remodels typically end up costing the seller, adding 87 cents of home value for every dollar spent, Zillow said.