How to Select the Best Home Improvements to Increase Resale Value
Insight Money Matters

How to Select the Best Home Improvements to Increase Resale Value

Increase Resale Value

It’s tough to know which home improvement projects are worth your time when the ultimate goal is to increase your return on the investment (ROI). Many home upgrades cost more to complete with supplies and labor than they recoup. According to Remodeling Magazine, on average, only 64.4 percent of home improvement costs are regained at resale – and that’s when a home sells within one year of the upgrade.

The data available to measure returns on property updates evaluates projects independently, but individual improvements rarely offer significant returns. A flipped home, on the other hand, requires numerous improvements and can experience substantial ROI. Unfortunately, those results are circumstantial, leaving investors with limited data on home improvement gains.

A combination of Remodeling Magazine’s cost vs value data and Zillow’s analysis of listing features that increase resale value reveal a handful of projects that benefit sellers’ ROI.

Home Improvements Worth Your Investment

The only individual project resulting in both your money back plus additional cash is the addition of fiberglass attic insulation. The project is a midrange improvement as far as investments go, costing about $1,268 to complete and adding $1,482 to your home’s price tag. After your costs, you gain a 16.9 percent return. No other single project is expected to recoup its costs this year.  

Reviewing 2015 listings and home sale prices, Zillow found some home features that notably increased ROI and aren’t too costly. The mention of a barn door caused homes to sell for 13.4 percent above their expected values. If your property is worth $200,000, the addition of a barn door could raise resale by $26,800 – and installing a barn door can be done for less than that boost.

If you’re updating the kitchen, listing features that improved sale prices included Shaker cabinets (9.6 percent lift), farmhouse sink (7.9 percent life), subway tile (6.9 percent lift) and quartz (6 percent lift). Plus, if you’re flipping a home, you’re paying for every day the home doesn’t sell. These features each sped up resale by more than a month.  

High-Performing Home Improvements with Potential Returns

If you’re more interested in upgrading a handful of items to create an impactful facelift to a property, you might consider some of these projects with impressive returns. But don’t expect them to line your pockets with cash because individually they don’t fully recoup their investment costs. A midrange garage door replacement costs about $1,652 and adds $1,512 to your sale price. Opting for an upscale garage door, investing about $3,140, has a slightly lesser return of $2,830. Replacing the front entry with a midrange steel door might cost $1,335 and recoup $1,217. All these projects have more than a 90 percent return, meaning they’re about 10 percent shy of their investment costs.

Exposed brick adds a 4.9 percent lift to the expected sale price, and may even save money on refinishing brick walls. Adding a pendant light offers a 4.6 percent boost and might only cost $50 upfront. A frameless shower costs more for installation, yet increases resale by 4.6 percent.

Avoid These Home Improvements If Return Is the Goal

A couple of improvement projects are worth dodging since you’re likely to regain just half of your investment at resale, certainly nothing on top. Tackling a major kitchen remodel is not in your best interest, according to data found in the book Zillow Talk. The investment may cost $60,000 and recoup approximately 50 cents for every dollar spent. Another bust is finishing a basement. The full renovation only yields about 48 cents per every dollar spent. And leaving the basement unfinished could attract buyers interested in finishing the space to their liking.

Some homes are in need of serious improvements, and turning a dump into a move-in-ready space rather than a top-of-the-line property can recoup major ROI. But think carefully about the projects you select before investing, because one-off upgrades are unlikely to score big bucks.